Identity theft doesn't just happen to us individuals. It's happening to some brokerages, too. A new scam targets investors by approaching them online as someone posing as a representative of an actual brokerage firm that is a member of the Securities Investor Protection Corporation (SIPC). They're then sold a bill of goods.
Here are some tips on how to avoid getting taken to the cleaners:
- The best advice is to simply refuse any unsolicited online contact from anyone seeking personal information or money by hitting the delete key.
- Remember that if an investment sounds too good to be true, it probably is. It's probably not a Wal-Mart
(NYSE:WMT)or Microsoft (NASDAQ:MSFT)caliber company if people have to peddle its shares around. If someone wants to pay you a premium for your lousy investment, or tells you that you have to pay a deposit in order to sell a security, don't believe it.
- Before dealing with any broker or brokerage firm for the first time, check them out. You can research them via your state securities regulator or by going online to the National Association of Securities Dealers service, BrokerCheck.
- Report anything suspicious or nefarious to the authorities so that they can follow up on it. It's estimated that most victims never report being conned. If you've been the victim of a brokerage identity theft scheme or have just been contacted by one, email the SEC or contact your state securities agency. Be sure to document your complaint and to ultimately submit it in writing, not over the phone.
- Learn about investment fraud at the SIPC website.
Meanwhile, if you're looking for an upstanding brokerage, educate yourself in our Broker Center.
Selena Maranjian owns shares of Microsoft.