A financial adviser's alleged LinkedIn fraud is calling attention to the growing use of social media for securities scams. General Counsel for who deal in securities matters may want to take note.
The Securities and Exchange Commission accuses Anthony Fields of Lyons, Ill., of trying to hawk more than $500 billion in fraudulent securities via posts on LinkedIn and other social media sites, the Chicago Tribune reports.
The SEC's action against Fields coincided with two investor alerts released back in Jan. The alerts warn that criminals are increasingly using social-media sites like LinkedIn to commit fraud, and suggest that financial professionals should set strict guidelines for social-media use.
In Anthony Fields' alleged LinkedIn fraud, he created two companies and a false online paper trail that supposedly showed millions in assets under his management, MediaPost reports.
Fields allegedly used LinkedIn to advertise his bogus securities. Though a few potential buyers expressed interest, Fields failed to sell anyone on the scam.
Experts say there were red flags that Fields was a LinkedIn fraud. For example, legitimate financial planners must adhere to strict rules regarding advertisements. "Even posting a client's positive comment may cross the line," according to the Tribune.
There are other factors to watch out for. The SEC's investor alerts offered five tips to avoid Internet investment fraud:
- Be wary of unsolicited sales pitches via Facebook wall posts, tweets that mention you, or spam.
- Look for common "red flags" such as a promise of guaranteed returns, or pressure to buy immediately.
- Look out for "affinity fraud" -- scams that target members of identifiable groups such as religious or ethnic communities, or professional associations.
- Be thoughtful about privacy and security settings, because anything that's "public" could be broadcast to the world, not just to your friends.
- Ask questions and check out everything including your broker's background. Check out FINRA's online BrokerCheck website and the SEC's Investment Advisor Public Disclosure site.
In Anthony Fields' case, he didn't even possess the proper credentials to sell securities, according to the SEC.
- Adviser Accused of Using LinkedIn to Promote Bogus Deals (The New York Times)
- Investor Bulletin: Social Media and Investing - Understanding Your Accounts (U.S. Securities and Exchange Commission)
- Securities Law: FAQs (FindLaw)
- SEC Indicts Former Fannie Mae and Freddie Mac Execs for Securities Fraud (FindLaw's Courtside)