The SEC made these recommendations to prevent fraud and avoid certain vulnerabilities. I agree and have added a comment when appropriate.
- Investors should not make any investment decisions relying solely on information from social media platforms and apps. Best to email us and research outside of the platforms/device.
- SEC states that celebrities and millionaires, and influencers are paid to make investment recommendations on social media and investors should not be swayed by these testimonials or celebrity endorsements. This applies even if they are not paid. It is surprising how many can be swayed when enough fame surrounds a topic.
- Find and verify the identity of the underlying source. Particular attention paid to slight variations in the email address, screen name, account name. Only contact a broker/advisor with a number listed on the SEC website or from the advisor ADV/agreement. If in doubt, contact us.
- Though a verified account (like Instagram, Twitter, LinkedIn) can help towards some authenticity. You are encouraged to verify all information outside of social media. These ‘verifications’ are not regulated.
- If you receive a message from an advisor recommending that you buy a specific investment, then first contact them directly (outside of social media) to ensure they were the source of that recommendation. Do not invest your hard-earned dollars based on an app or an online conversation.
- Be aware that there are many crypto scams that promise high investment returns with rapid increase and touted as having little to no risk. Any time you see little or no risk, STOP, this is likely fraud since crypto has real risks.
- Do not share your financial information or identity when in a new romance. Your SSN, DOB, passport, bank accounts are the keys to your financial life and electronic identity – protect them. If travelling be wary of a travel romance that accelerates quickly into financial involvement or marriage.
- Be cautious of postings from social media accounts that have minimal history or a history of reporting company stock prices. It is common to do ‘pump and dump’ strategies through social media (remember that I described ‘pump and dump’ mailing strategies a few years ago – these are just online versions of the old scams). These are most common with Penny Stocks since they are easily manipulated.
Let us know if you encounter any financial product before you purchase them. Sometimes it is not a fraudulent product but one that is not ideal for your long-term goals.
Edi Alvarez, CFP®
BS, BEd, MS