SEC, FINRA Highlight Emerging Risks for Investors During World Investor Week 2021

World Investor Week is “a global campaign to raise awareness about the importance of investor education and protection.” This year, it took place from October 4 through 10. The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) both published online resources for World Investor Week 2021 in which they discuss emerging risks for individual investors. Securities fraud attorney Jake Zamansky covers some of the highlights:

Emerging Risks for Retail Investors in the U.S.

The resources published by the SEC and FINRA address several investment risks that have come to the forefront during 2021. The divergent nature of these risks underscores the importance of investors doing their due diligence, monitoring their accounts and seeking help at the first sign of potential fraud. The risks the SEC and FINRA chose to highlight during World Investor Week 2021 include:

• Digital Engagement – Both legitimate and illegitimate actors are increasingly relying on forms of digital engagement such as gamification and robo-advising to attract retail investors. However, these actors often fail to adequately convey the risks involved, and in many cases they make it difficult (if not impossible) for investors to withdraw their funds.
• Cryptocurrency Investments – While investing in cryptocurrency presents its own unique set of risks, companies and scam artists are bombarding retail investors with opportunities to invest in initial coin offerings (ICOs) and other cryptocurrency-related securities. Many of these are extremely high-risk (if not fraudulent) investments, and retail investors are being encouraged to put their money into investments they do not fully understand.
• Investing in China and Off-Shore Shell Companies – The Evergrande saga has brought the risks of investing overseas into sharp focus, but this is far from the only issue we’ve seen in recent years. Investing in Chinese stocks and shares of off-shore shell companies has become popular due to exposure in the media and on social media, but it is extremely risky for individual investors.
• Teen Investors – Many of the digital engagement efforts discussed above have focused on attracting younger investors, including teens. For World Investor Week, the SEC published an article titled Taking Stock in Teen Trading that, “speaks directly to parents and teens about . . . topics such as teen trading accounts, social media influence, and apps.”
• Brokerage Imposter Scams – According to FINRA, “Over the past year, securities regulators have observed an increase in cyber-related incidents, including fraudsters creating fake websites using the names and professional details of actual industry professionals.” The self-regulatory organization is encouraging investors to carefully review emails, direct messages and websites for signs of fraud before investing with brokers with whom they do not have a direct connection—particularly when these brokers contact them with unsolicited inquiries.

Request a Free Consultation with Securities Fraud Attorney Jake Zamansky

Zamansky LLC is an investor protection law firm located in the heart of Wall Street. If you have concerns about securities fraud and would like to speak with an attorney, you can call 212-742-1414 or contact us online to arrange a free initial consultation.