FINRA issued an alert warning investors of bogus stock promotions and other solicitations sent via messaging apps for mobile devices such as iPhones and Androids such as the popular WhatsApp.
According to the investor alert, scammers have been using instant messaging apps to promote penny or "microcap" stocks. Though the illicit spam text messages could theoretically tout anything and the scammers could purport to be anyone or any firm, FINRA issued this investor alert after discovering a scam targeting WhatsApp users touting the over-the-counter stock Avra, Inc. (OTC: AVRN).
Regulators discovered that the scammers purported to be from well-known brokerage firms, making lofty claims about AVRN, including that it was "going to double in the next few days" or "is going up 300% next week."
FINRA is quick to point out that the WhatsApp/text messaging scam is a variant of the classic pump-and-dump, wherein fraudsters use spam communications to tout a stock, causing a rush of buying activity to "pump" up its price, and when the price is high enough, the fraudsters will "dump" or sell the numerous shares they personally own and stop touting the stock; leaving duped investors with a worthless or near-worthless stock.
As for advice? "When it comes to pump-and-dump spam, the smartest play is the easiest. Don't respond—just delete."
For instance, the SEC and FINRA issued a joint alert in June 2013 warning investors of pump-and-dump fraud schemes being perpetrated through the use of e-mail spam (FINRA advocated hitting the delete key back then, too). Prior to that, fraudsters would cold call potential marks on the phone, operating in a telemarketing-type environment.
If you have invested with any broker, financial adviser or other professional whose solicitation of a penny stock or other security directly involved in a fraudulent pump-and-dump scheme such as Avra, Inc. (AVRN), through false claims, guarantees, misinformation, or other misrepresentation has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
Investor Alert: Messaging Apps Are Latest Platform for Delivering Pump-And-Dump Scams (FINRA)