IPO Scam Uses Fake SEC Documents

Fraudsters are attempting to sell initial public offering shares of well-known companies using forms that appear to have come from the SEC or another legitimate source.

Fraudsters are attempting to sell initial public offering (IPO) or pre-IPO shares of well-known companies. The Securities and Exchange Commission (SEC) warns that these scammers may be using forms that appear to have come from the SEC or another legitimate source. The forms and/or the pitch may be made through email.

One method the fraudsters are using to try to establish credibility is a fake version of the SEC’s Form 4. Form 4 is regulatory disclosure document. It is generally filed by directors, executive officers or holders of more than 10% of a company’s securities to report purchases and sales of the company’s securities. Most investors are not required to file Form 4.

The fraudsters may use a fake Form 4 as a confirmation statement, which it is not. The SEC bluntly states in its Investor Alert that the agency “does not independently confirm trading transactions by email, correspondence or otherwise.”

Form 4, like all required SEC filings for corporations, can be found and read on the agency’s EDGAR database. Filings can be searched by type, including Form 4. To ensure all ownership filings are included, be sure to click on “include” underneath “Ownership” on the expanded search page.

In addition to using fake regulatory filings, the fraudsters may also be sending emails pretending to come from an official government account. One reported email address is no-reply@edgarlink.us. The underlying domain, edgarlink.us, is registered to a private entity and not the SEC. As of press time, the SEC said it had obtained an order suspending this internet domain name. Given the low cost of registering domains, an alternative domain could be quickly established. As such, investors should beware of emails purporting to come from a U.S. agency and not having an address ending in .gov, .mil or .us.

It is a good idea to be skeptical of any unsolicited offer to make an investment, be it the purchase of stocks, bonds, mutual funds, real estate, annuities or any security or venture. Always conduct a background check on the SEC’s Investment Advisor Public Disclosure and FINRA’s BrokerCheck. Most importantly, walk away from any high-pressure pitch and never make a rush decision to buy.

Source: “Investor Alert: Investment Scams Involving Fake Forms 4,” U.S. Securities and Exchange Commission,” November 1, 2016.