Safeguarding From Fraudulent Activity At any given time, natural disasters are occurring in various locations around the country. These types of situations are ripe for fraudulent activities. Bad actors surface around every corner, and it is imperative that your broker dealer does not become a victim of these criminals. The Financial Industry Regulatory Authority (“FINRA”) defines a bad actors as someone “who seeks to evade regulatory requirements and harm investors for their own personal gain.” A bad actor can show up in many ways and forms. Several red flags include: Someone within your broker dealer may receive an email requesting Read more about Safeguarding From Fraudulent Activity[…]
FINRA released regulatory notice 21-03, FINRA Urges Firms to Review Their Policies and Procedures Relating to Red Flags of Potential Securities Fraud Involving Low-Priced Securities, discussing issues with these securities offerings and fraud. Specifically, including those involving COVID-19 and cannabis related businesses, which appear to have been part of potential pump-and-dump or market manipulation schemes that target unsuspecting investors.
In the notice, FINRA states that “Low-priced securities tend to be volatile and trade in low volumes. It may be difficult to find accurate information about them. There is a long history of bad actors exploiting these features to engage in fraudulent manipulations of low-priced securities. Frequently, these actors take advantage of trends and major events — such as the growth in cannabis-related businesses or the ongoing COVID-19 pandemic — to perpetrate the fraud.”