Has Dodd-Frank spawned a cottage industry of fraudsters? The Securities and Exchange Commission (SEC) reports its staff is receiving numerous complaints about whistleblowers. Well, not real whistleblowers. Fictional whistleblowers and fraudsters. And they will call you or e-mail you at the office or at home.
Seems SEC staff is rather inundated with complaints about SEC staff. Of course, the complaints don’t really involve SEC staff, the complaints are about fraudsters who claim to be with the SEC. Here’s the scheme:
The investor receives a bogus e-mail purporting to be from the SEC’s Office of the Whistleblower. The e-mail is not from the SEC, and contains a link to malicious software.
Dear customer, Securities and Exchange Commission Whistleblower office has received an anonymous tip on alleged misconduct at your company, including Material misstatement or omission in a company’s public filings or financial statements, or a failure to file Municipal securities transactions or public pension plans, involving such financial products as private equity funds. Failure to provide a response to this complaint within 14 day period will result in Securities and Exchange Commission investigation against your company. You can access the complaint details in U.S. Securities and Exchange Commission Tips, Complaints, and Referrals portal under the following link:
Yes, there really is an Office of the Whistleblower. The e-mail, however, is entirely a hoax.
Another scam scenario: the fraudster calls you and pretends to be an SEC employee and informs you that you are potential victim of corporate abuse. The offer you a large sum of money (in some cases, the amount of $450K is used) in return for you depositing a smaller amount (for example, $1500) into a specified account. Sometimes they refer to the name of a legitimate company and refer prospective investors to an operating website.
Not surprisingly, the SEC wants to alert you to this fraud, whether the solicitation is made by phone, email or any other method. They also remind us that the SEC does not endorse investment offers, assist in the purchase or sale of securities, or participate in money transfers. Nor is the SEC affiliated with any sweepstakes, drawings, lotteries, or other types of events that feature prizes or winnings or cash windfalls.
SEC staff will not, for example, contact individuals by telephone or email for purposes of:
• seeking assistance with a fund transfer;
• forwarding investment offers to them;
• advising individuals that they own certain securities;
• telling investors that they are eligible to receive disbursements from an investor claims fund or class action settlement; or
• offering grants or other financial assistance (especially for an upfront fee).
Just when you’ve finally explained to your dear aunt that really, nobody in Nigeria needs her help in Oshkosh…now it’s time to explain to your staff that the SEC is really not investigating your company — and, by the way, you need to explain this to your aunt, too.