Investor Alert: Investment Scams Involving Fake Forms 4
Nov. 1, 2016
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn investors about potential investment schemes in which fraudsters send fake Forms 4 to investors who paid for the purported purchase of shares.
We have learned of potential scams in which fraudsters may pose as brokers pretending to sell pending IPO or pre-IPO shares of well-known companies. Fraudsters sometimes use official looking forms that seem to come from the SEC or another legitimate source to establish credibility with the victim. In some cases, the fraudsters have emailed fake Forms 4 from a source pretending to be the SEC claiming that the fake form confirms the investor’s purchase of the shares. It is unclear whether the investors have actually purchased any shares. Instead, the fraudsters may have simply stolen their money. The fraudsters may also provide online account access to investors on a website that looks like a brokerage firm website.
The SEC does not send trade confirmations. If you buy a security through a U.S.-registered broker-dealer, the broker-dealer generally must send you a trade confirmation statement. The SEC does not independently confirm trading transactions by email, correspondence or otherwise. Any email or correspondence purportedly from the SEC confirming a specific securities transaction is a red flag.
A Form 4 is not a Confirmation Statement
Form 4 filings are not confirmations of purchases or transfers of shares, and being provided a Form 4 for these purposes is a red flag. Instead, Forms 4 are disclosure filings that are generally filed by corporate insiders (such as directors, executive officers and holders of more than 10% of any class of a company’s securities) to report purchases and sales of the company’s securities. If you are not a director, officer or 10% owner of the company, you are not required to file a Form 4.
You can confirm a filing on EDGAR. Even though Forms 4 are not trade confirmation statements, if you receive a Form 4 filing that has been purportedly filed on your behalf you can easily and independently verify whether such a filing is real by searching the SEC’s EDGAR database. After selecting the applicable company, be sure to click on the option to include ownership filings in the search refinement bar and hit the search button:
Check Background and Registration Status
When someone tries to sell you an investment, the first thing you should do is check whether they are registered. Investors in the United States can check out the background, including registration or license status, of any firm or financial professional you are considering dealing with (including broker-dealers) through the SEC’s Investment Adviser Public Disclosure (IAPD) database, which is available on Investor.gov. You can also contact your state regulator. Investors outside of the United States should contact their countries’ financial regulators and the regulators in the jurisdictions where the broker appears to be located.
Do not be fooled by con artists who create websites that look and feel legitimate, who sound convincing, or who are very responsive when you contact them just as legitimate brokers may be. Even if someone tells you that they are registered, verify this fact independently. A few minutes of your time may save you from handing over your money to fraudsters.
Impersonating Official SEC Sources
Fraudsters, as in these scams, may send fake emails that pretend to be from official U.S. government sources. The SEC has received complaints of investors receiving a fake Form 4 from the email address firstname.lastname@example.org indicating the website edgarlink.us, which redirected to an official SEC website. A private entity registered the edgarlink.us domain name without SEC authorization and the SEC has obtained an order suspending this Internet domain name. You should be alert, however, to fraudsters using similar official-looking domain names.
If you receive an email message claiming to be from a U.S. government agency and the sender’s email address does not end in .gov, .mil or .fed.us, you should be particularly skeptical. Even if the sender’s email address appears to end in .gov, .mil or .fed.us, an impersonator may have sent the email message.
If you are unsure whether correspondence claiming to be from the SEC is authentic, call the SEC’s toll-free investor assistance line at (800) 732-0330 (or 1-202-551-6551 from outside of the U.S.), or submit a question online to the SEC. If you have been contacted by someone pretending to be from the SEC, submit a complaint at www.sec.gov/oig to the SEC’s Office of Inspector General (OIG) or call the OIG’s toll-free hotline at (833) SEC-OIG1 (732-6441).
For information on pre-IPO investment scams, see our Investor Alert.
For information on fraudsters misrepresenting that Form D filings were evidence of registration with the SEC, see our Investor Alert.
For information on how to search for filings in the SEC’s EDGAR database, see Using EDGAR - Researching Public Companies.
Visit Investor.gov, the SEC's website for individual investors.
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