The Financial Industry Regulatory Authority and Meyer Wilson want investors
to be aware of the recent popularity of stock scams occurring over messaging
apps. Investors should be aware of any unsolicited emails promoting penny
stocks. Fraudsters are now targeting victims through messaging apps such
as WhatsApp to trap unsuspecting individuals in pump-and-dump schemes.
FINRA has seen recent spikes in spam messages on WhatsApp, where users
are encouraged to invest in penny or “microcap” stocks. Microcap
stocks are characterized by their low total value of the whole company.
Some things to be aware of microcap stocks:
- There is generally little information available to the public about the
companies. This makes them more susceptible to fraud.
- They do not have a minimum for listing standards.
- Microcap stock companies are generally riskier. These companies tend to
be newer, thus lacking the established track record of bigger, wider known
If you are working with a broker, advisor, or firm, it might be helpful
to ask them for more information about prospective microcap companies.
Scammers are using these microcap companies as a vessel to scam investors.
Stockholders were recently solicited to invest in AVRA Inc., through WhatsApp.
The fraudsters pretended to be connected to well-established firms. When
introducing themselves, they typically only used first names. Finally,
these scams offered investors high returns on stocks, claiming they only
had a limited number available.
Messaging app scams like these are related to pump-and-dump schemes. These
schemes are when stocks are initially sold because of false promises.
Because customers buy the stocks so quickly, it pumps their value. The
scammers then sell all their stocks at the peak price value. Swiftly thereafter,
the prices of the stocks plummet, leaving them to be worthless or very
We at Meyer Wilson want you to be well prepared when investing in any form
of stocks. This is why we warn you from hastily investing in stocks that
seem too good to be true. If you receive unsolicited messages through
messaging apps, we recommend that you ignore or delete them. If you would
like to know more about your legal rights when it comes to investments,
contact our experienced investment fraud attorneys today!