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Social Media and Investment Fraud – Investor Alert – SEC.gov

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Fraudsters often use social media to scam investors.  The SEC’s Office of Investor Education and Advocacy encourages you to be skeptical and never make investment decisions based solely on information from social media platforms or apps.

Investors increasingly rely on social media for information about investing.  While social media can provide many benefits to investors, it also creates opportunities for fraudsters.  Social media allows fraudsters to contact many people quickly, cheaply, and without much effort – and it is easy for fraudsters to post information on social media that looks real and credible. 

Fraudsters may disseminate false information anonymously or while pretending to be someone else.  They may make up credentials, create entirely fake profiles, or impersonate legitimate sources.  It can be difficult to track down who is behind a social media account, and anonymity can make it harder for fraudsters to be held accountable.  

Testimonials and Celebrity Endorsements.  Do not be swayed by testimonials or celebrity endorsements when making an investment decision.  Fraudsters sometimes pay people – for example, actors to pose as ordinary people turned millionaires, social media influencers, and celebrities – to tout an investment on social media.

Investment information found in social media also may be inaccurate, incomplete, or misleading.  Social media may convey false impressions of consensus or legitimacy, making it look like large numbers of people are buying an investment when this is not the case.  Fraudsters may use social media to lure investors into a variety of schemes, including impersonation schemes, “crypto” investment scams, romance scams, market manipulation schemes, and community-based investment fraud.  Here are a few scams you should be aware of:

Impersonation Schemes

Fraudsters may impersonate legitimate brokers or investment advisers or other sources of market information on social media.  For example, fraudsters may set up an account name, profile, or handle designed to mimic a particular individual or firm.  They may go so far as to create a webpage that uses the real firm’s logo, links to the firm’s actual website, or references the name of an actual person who works for the firm.  Fraudsters also may direct investors to an imposter website by posting comments in the social media account of brokers, investment advisers, or other sources of market information.

When you receive investment information through social media, verify the identity of the underlying source.  Look for slight variations or typos in the sender’s account name, profile, email address, screen name, or handle, or other signs that the sender may be an imposter.  When contacting a company or attempting to access its website, be sure to use contact information or the website address provided by the company itself, such as in the company’s SEC filings.  Similarly, only contact a broker or investment adviser using contact information you verify independently – for example, by using a phone number or website listed in the firm’s Client Relationship Summary (Form CRS).  Carefully type the website’s url into the address bar of your web browser.

Some social media operators have systems that may help you to determine whether a sender is genuine.  For example, Twitter verifies accounts for authenticity by posting a blue verified badge (a solid blue circle containing a white checkmark) on Twitter profiles.  While a verified account does not guarantee that the source is genuine, readers should be more skeptical of information from accounts that are not verified.

Fraudsters may even impersonate SEC staff on social media.  Like many companies and agencies, the SEC maintains a list of verified social media accounts, which is available at www.sec.gov/opa/socialmedia.

Fraudsters have also found victims by hacking into social media profiles and sending fraudulent investment opportunities to the hacked person’s contacts.  Be wary if someone – even someone you trust – sends a social media message recommending an investment, and be sure to check with them “off-line” to make sure that person actually sent the message.

“Crypto” Investment Scams

Fraudsters may exploit investors’ fear of missing out to lure investors on social media into “crypto” investment scams.  “Crypto” assets are marketed using a variety of terms, including digital assets, cryptocurrencies, coins, and tokens. 

How do you know if an investment involving “crypto” assets is a scam?  As with any other type of investment product, if a crypto investment “opportunity” sounds too good to be true, it probably is.  Promises of high investment returns, with little or no risk, are classic warning signs of fraud.  Fraudsters may post fabricated historical returns on their websites showing high investment returns.  Depictions of investment accounts rapidly increasing in value and providing large returns are often fake.  

If you are considering a “crypto” asset-related investment, take the time to understand how the investment works and look for warning signs that it may be a scam.  Carefully review all materials and ask questions.  Check out the background (including license and registration status) of anyone offering you an investment in securities using the search tool on Investor.gov.

Learn more about investments involving “crypto” assets on Investor.gov.

Romance Scams

Romance scams through apps or websites have become increasingly pervasive as fraudsters take advantage of anonymity to mask their deceptive intentions.  The fraudster may be located in another country and communication may be exclusively through messaging due to language barriers.  Do not invest money based on advice from someone you have solely met online or through an app.  Do not share any information relating to your personal finances or identity including your bank or brokerage account information, tax forms, credit card, social security number, passport, driver’s license, birthdate, or utility bills. 

The FBI issued a Public Service Announcement about fraudsters using romance scams to persuade victims to send money allegedly to invest or trade cryptocurrency.  How these scams typically work is the fraudster establishes an online relationship with the victim through a dating app or other social media site.  The fraudster gains the victim’s confidence and trust, and then claims to know about lucrative cryptocurrency investment or trading opportunities. The fraudster directs the victim to a fraudulent website or app.  After the victim invests and sees a purported profit, the website or app allows the victim to withdraw a small amount of money, further gaining the victim’s trust.  The fraudster then instructs the victim to invest larger amounts of money and conveys a sense of urgency.  When the victim tries to withdraw funds again, the victim is instructed to pay additional funds, claiming that taxes or fees need to be paid or a minimum account balance must be met. When the victim can no longer pay the additional funds, the fraudster stops communicating with the victim and the victim cannot get the money back.

Other agencies and organizations also have issued warnings about romance scams, including:

Be careful if someone claims to offer you an investment opportunity that is exclusive or based on “inside” or confidential information.  Do not take comfort because someone encourages you to make an investment through what appears to be a third party website or app.  The fraudster may be behind the website or app, and it may be a scam.  Also, be wary of any “opportunity” that requires you to use “crypto” assets (for example, Bitcoin or BTC) to purchase an investment.

If you encounter any issues withdrawing your money from an investment, do not put in more money to try to get your money out, and submit a complaint to the SEC If you believe you have been the victim of an Internet crime, report it to the FBI’s Internet Crime Complaint Center IC3.

Do not be pressured to act quickly.  Take your time to research an investment thoroughly before handing over your money.

Market Manipulation Schemes

Fraudsters can manipulate the share price of a company’s stock (either positively or negatively) by spreading rumors on social media. Fraudsters then profit at investors’ expense.  Fraudulent stock promotions on social media can take various forms, including memes.

Fraudsters may promote a stock on social media anonymously or while pretending to be someone else.  Fraudsters can set up new accounts specifically designed to carry out their scam while concealing their true identities.  Be skeptical of information from social media accounts that lack a history of prior postings or that contain minimal original content.

Fraudsters may use social media to conduct schemes including: 

  • Pump and dump schemes – pumping up the share price of a company’s stock by making false and misleading statements to create a buying frenzy, and then selling shares at the pumped up price. 
  • Scalping – recommending a stock to drive up the share price and then selling shares of the stock at inflated prices to generate profits.
  • Touting – promoting a stock without properly disclosing compensation received for promoting the stock. 

In other instances, fraudsters start negative rumors urging investors to sell their shares so that the share price plummets and then the fraudsters buy shares at the artificially low price.

Exercise extreme caution if there appears to be greater promotion of the company’s stock than of the company’s products or services.  Be skeptical regarding new posts on your wall, tweets, direct messages, emails, or other communications you did not ask for that promote a particular stock (even if the sender appears connected to someone you know). 

Community-Based Investment Fraud

Fraudsters often use social media to perpetuate community-based investment fraud (aka affinity fraud), which targets members of groups with common ties, including based on ethnicity, nationality, religion, sexual orientation, military service, and age.  These scams exploit the trust and friendship that exist within groups. 

Many communities use social media as a way to stay connected and share information.  Fraudsters, who may be (or pretend to be) part of the group they are trying to cheat, may solicit potential victims on social media through posts or direct contact.  Fraudsters also may enlist group leaders, who then spread the word about the scheme on social media.  Those leaders may not realize the “investment” is actually a fraud, which means they too may be victims.

Know who you are dealing with and know what is being offered – even if you have something in common with the person.  Type the person’s name into the search tool on Investor.gov to do a background check.  Confirm that the person is currently registered or licensed, and find out if that person has any disciplinary history.  

***

Check the background of anyone selling or offering you an investment and confirm that the person is currently registered or licensed.  It only takes a few minutes using the free and simple search tool on Investor.gov.  

Before making any investment, research the company thoroughly.  Make sure you understand its business and carefully review publicly disclosed company information

Never feel pressured to buy an investment right away.  It can be tempting to jump on the band wagon and follow whatever the crowd seems to be doing on social media.  Sometimes, however, following the crowd may lead you to fall victim to an investment scam. 

Additional Resources

SEC Charges Siblings in $124 Million Crypto Fraud Operation that included Misleading Roadshows, YouTube Videos

SEC Charges Social Media Stock Promoter with Penny Stock Fraud

SEC Obtains Asset Freeze and Other Relief in Halting Penny Stock Scheme on Twitter

Protect Your Social Media Accounts

Investor Alert: Thinking About Investing in the Latest Hot Stock? Understand the Significant Risks of Short-Term Trading Based on Social Media

Investor Bulletin: Social Sentiment Investing Tools —Think Twice Before Trading Based on Social Media

Social Isolation and the Risk of Investment Fraud

Report possible securities fraud to the SEC online at www.sec.gov/tcr.

Protect your hard earned money – learn more tips on investing wisely and avoiding fraud at Investor.gov.

Call the SEC’s Office of Investor Education and Advocacy (OIEA) at 1-800-732-0330, ask a question using this online form, or email OIEA at Help@SEC.gov.  Receive Investor Alerts and Bulletins by email or RSS feed.

Follow OIEA on Twitter @SEC_Investor_Ed. Like OIEA on Facebook at facebook.com/secinvestoreducation.

This Investor Alert represents the views of the staff of the Office of Investor Education and Advocacy. It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This Investor Alert, like all staff statements, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.

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What to stream this weekend: ‘Civil War,’ Snow Patrol, ‘How to Die Alone,’ ‘Tulsa King’ and ‘Uglies’

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Hallmark launching a streaming service with two new original series, and Bill Skarsgård out for revenge in “Boy Kills World” are some of the new television, films, music and games headed to a device near you.

Also among the streaming offerings worth your time as selected by The Associated Press’ entertainment journalists: Alex Garland’s “Civil War” starring Kirsten Dunst, Natasha Rothwell’s heartfelt comedy for Hulu called “How to Die Alone” and Sylvester Stallone’s second season of “Tulsa King” debuts.

NEW MOVIES TO STREAM SEPT. 9-15

Alex Garland’s “Civil War” is finally making its debut on MAX on Friday. The film stars Kirsten Dunst as a veteran photojournalist covering a violent war that’s divided America; She reluctantly allows an aspiring photographer, played by Cailee Spaeny, to tag along as she, an editor (Stephen McKinley Henderson) and a reporter (Wagner Moura) make the dangerous journey to Washington, D.C., to interview the president (Nick Offerman), a blustery, rising despot who has given himself a third term, taken to attacking his citizens and shut himself off from the press. In my review, I called it a bellowing and haunting experience; Smart and thought-provoking with great performances. It’s well worth a watch.

— Joey King stars in Netflix’s adaptation of Scott Westerfeld’s “Uglies,” about a future society in which everyone is required to have beautifying cosmetic surgery at age 16. Streaming on Friday, McG directed the film, in which King’s character inadvertently finds herself in the midst of an uprising against the status quo. “Outer Banks” star Chase Stokes plays King’s best friend.

— Bill Skarsgård is out for revenge against the woman (Famke Janssen) who killed his family in “Boy Kills World,” coming to Hulu on Friday. Moritz Mohr directed the ultra-violent film, of which Variety critic Owen Gleiberman wrote: “It’s a depraved vision, yet I got caught up in its kick-ass revenge-horror pizzazz, its disreputable commitment to what it was doing.”

AP Film Writer Lindsey Bahr

NEW MUSIC TO STREAM SEPT. 9-15

— The year was 2006. Snow Patrol, the Northern Irish-Scottish alternative rock band, released an album, “Eyes Open,” producing the biggest hit of their career: “Chasing Cars.” A lot has happened in the time since — three, soon to be four quality full-length albums, to be exact. On Friday, the band will release “The Forest Is the Path,” their first new album in seven years. Anthemic pop-rock is the name of the game across songs of love and loss, like “All,”“The Beginning” and “This Is the Sound Of Your Voice.”

— For fans of raucous guitar music, Jordan Peele’s 2022 sci-fi thriller, “NOPE,” provided a surprising, if tiny, thrill. One of the leads, Emerald “Em” Haywood portrayed by Keke Palmer, rocks a Jesus Lizard shirt. (Also featured through the film: Rage Against the Machine, Wipers, Mr Bungle, Butthole Surfers and Earth band shirts.) The Austin noise rock band are a less than obvious pick, having been signed to the legendary Touch and Go Records and having stopped releasing new albums in 1998. That changes on Friday the 13th, when “Rack” arrives. And for those curious: The Jesus Lizard’s intensity never went away.

AP Music Writer Maria Sherman

NEW SHOWS TO STREAM SEPT. 9-15

— Hallmark launched a streaming service called Hallmark+ on Tuesday with two new original series, the scripted drama “The Chicken Sisters” and unscripted series “Celebrations with Lacey Chabert.” If you’re a Hallmark holiday movies fan, you know Chabert. She’s starred in more than 30 of their films and many are holiday themed. Off camera, Chabert has a passion for throwing parties and entertaining. In “Celebrations,” deserving people are surprised with a bash in their honor — planned with Chabert’s help. “The Chicken Sisters” stars Schuyler Fisk, Wendie Malick and Lea Thompson in a show about employees at rival chicken restaurants in a small town. The eight-episode series is based on a novel of the same name.

Natasha Rothwell of “Insecure” and “The White Lotus” fame created and stars in a new heartfelt comedy for Hulu called “How to Die Alone.” She plays Mel, a broke, go-along-to-get-along, single, airport employee who, after a near-death experience, makes the conscious decision to take risks and pursue her dreams. Rothwell has been working on the series for the past eight years and described it to The AP as “the most vulnerable piece of art I’ve ever put into the world.” Like Mel, Rothwell had to learn to bet on herself to make the show she wanted to make. “In the Venn diagram of me and Mel, there’s significant overlap,” said Rothwell. It premieres Friday on Hulu.

— Shailene Woodley, DeWanda Wise and Betty Gilpin star in a new drama for Starz called “Three Women,” about entrepreneur Sloane, homemaker Lina and student Maggie who are each stepping into their power and making life-changing decisions. They’re interviewed by a writer named Gia (Woodley.) The series is based on a 2019 best-selling book of the same name by Lisa Taddeo. “Three Women” premieres Friday on Starz.

— Sylvester Stallone’s second season of “Tulsa King” debuts Sunday on Paramount+. Stallone plays Dwight Manfredi, a mafia boss who was recently released from prison after serving 25 years. He’s sent to Tulsa to set up a new crime syndicate. The series is created by Taylor Sheridan of “Yellowstone” fame.

Alicia Rancilio

NEW VIDEO GAMES TO PLAY

— One thing about the title of Focus Entertainment’s Warhammer 40,000: Space Marine 2 — you know exactly what you’re in for. You are Demetrian Titus, a genetically enhanced brute sent into battle against the Tyranids, an insectoid species with an insatiable craving for human flesh. You have a rocket-powered suit of armor and an arsenal of ridiculous weapons like the “Chainsword,” the “Thunderhammer” and the “Melta Rifle,” so what could go wrong? Besides the squishy single-player mode, there are cooperative missions and six-vs.-six free-for-alls. You can suit up now on PlayStation 5, Xbox X/S or PC.

— Likewise, Wild Bastards isn’t exactly the kind of title that’s going to attract fans of, say, Animal Crossing. It’s another sci-fi shooter, but the protagonists are a gang of 13 varmints — aliens and androids included — who are on the run from the law. Each outlaw has a distinctive set of weapons and special powers: Sarge, for example, is a robot with horse genes, while Billy the Squid is … well, you get the idea. Australian studio Blue Manchu developed the 2019 cult hit Void Bastards, and this Wild-West-in-space spinoff has the same snarky humor and vibrant, neon-drenched cartoon look. Saddle up on PlayStation 5, Xbox X/S, Nintendo Switch or PC.

Lou Kesten

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Trump could cash out his DJT stock within weeks. Here’s what happens if he sells

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Former President Donald Trump is on the brink of a significant financial decision that could have far-reaching implications for both his personal wealth and the future of his fledgling social media company, Trump Media & Technology Group (TMTG). As the lockup period on his shares in TMTG, which owns Truth Social, nears its end, Trump could soon be free to sell his substantial stake in the company. However, the potential payday, which makes up a large portion of his net worth, comes with considerable risks for Trump and his supporters.

Trump’s stake in TMTG comprises nearly 59% of the company, amounting to 114,750,000 shares. As of now, this holding is valued at approximately $2.6 billion. These shares are currently under a lockup agreement, a common feature of initial public offerings (IPOs), designed to prevent company insiders from immediately selling their shares and potentially destabilizing the stock. The lockup, which began after TMTG’s merger with a special purpose acquisition company (SPAC), is set to expire on September 25, though it could end earlier if certain conditions are met.

Should Trump decide to sell his shares after the lockup expires, the market could respond in unpredictable ways. The sale of a substantial number of shares by a major stakeholder like Trump could flood the market, potentially driving down the stock price. Daniel Bradley, a finance professor at the University of South Florida, suggests that the market might react negatively to such a large sale, particularly if there aren’t enough buyers to absorb the supply. This could lead to a sharp decline in the stock’s value, impacting both Trump’s personal wealth and the company’s market standing.

Moreover, Trump’s involvement in Truth Social has been a key driver of investor interest. The platform, marketed as a free speech alternative to mainstream social media, has attracted a loyal user base largely due to Trump’s presence. If Trump were to sell his stake, it might signal a lack of confidence in the company, potentially shaking investor confidence and further depressing the stock price.

Trump’s decision is also influenced by his ongoing legal battles, which have already cost him over $100 million in legal fees. Selling his shares could provide a significant financial boost, helping him cover these mounting expenses. However, this move could also have political ramifications, especially as he continues his bid for the Republican nomination in the 2024 presidential race.

Trump Media’s success is closely tied to Trump’s political fortunes. The company’s stock has shown volatility in response to developments in the presidential race, with Trump’s chances of winning having a direct impact on the stock’s value. If Trump sells his stake, it could be interpreted as a lack of confidence in his own political future, potentially undermining both his campaign and the company’s prospects.

Truth Social, the flagship product of TMTG, has faced challenges in generating traffic and advertising revenue, especially compared to established social media giants like X (formerly Twitter) and Facebook. Despite this, the company’s valuation has remained high, fueled by investor speculation on Trump’s political future. If Trump remains in the race and manages to secure the presidency, the value of his shares could increase. Conversely, any missteps on the campaign trail could have the opposite effect, further destabilizing the stock.

As the lockup period comes to an end, Trump faces a critical decision that could shape the future of both his personal finances and Truth Social. Whether he chooses to hold onto his shares or cash out, the outcome will likely have significant consequences for the company, its investors, and Trump’s political aspirations.

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Arizona man accused of social media threats to Trump is arrested

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Cochise County, AZ — Law enforcement officials in Arizona have apprehended Ronald Lee Syvrud, a 66-year-old resident of Cochise County, after a manhunt was launched following alleged death threats he made against former President Donald Trump. The threats reportedly surfaced in social media posts over the past two weeks, as Trump visited the US-Mexico border in Cochise County on Thursday.

Syvrud, who hails from Benson, Arizona, located about 50 miles southeast of Tucson, was captured by the Cochise County Sheriff’s Office on Thursday afternoon. The Sheriff’s Office confirmed his arrest, stating, “This subject has been taken into custody without incident.”

In addition to the alleged threats against Trump, Syvrud is wanted for multiple offences, including failure to register as a sex offender. He also faces several warrants in both Wisconsin and Arizona, including charges for driving under the influence and a felony hit-and-run.

The timing of the arrest coincided with Trump’s visit to Cochise County, where he toured the US-Mexico border. During his visit, Trump addressed the ongoing border issues and criticized his political rival, Democratic presidential nominee Kamala Harris, for what he described as lax immigration policies. When asked by reporters about the ongoing manhunt for Syvrud, Trump responded, “No, I have not heard that, but I am not that surprised and the reason is because I want to do things that are very bad for the bad guys.”

This incident marks the latest in a series of threats against political figures during the current election cycle. Just earlier this month, a 66-year-old Virginia man was arrested on suspicion of making death threats against Vice President Kamala Harris and other public officials.

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