Fraudulent stock promotions are using popular messaging apps, such as WhasApp, to carry out pump-and-dump schemes, Canadian securities regulators warn.
The warning came in an investor alert announced on Tuesday from securities regulators in nine provinces.
Last month, the U.S. Financial Industry Regulatory Authority (FINRA) issued a similar warning about the use of smartphone apps by stock fraudsters.
As with traditional “pump-and-dump” schemes that try to hype up artificial interest in a stock, “these promotions use spam to talk up the benefits of a company and convince people to invest,” Canadian regulators say in a statement.
These schemes aim to drive up the price of the stock, so that the fraudsters can then dump their shares, whose value then plummets, leaving victims of the scheme with worthless shares.
“Investors, and in particular users of messaging applications, should ignore any promotional spam they receive and report it to their provincial or territorial securities regulatory authority,” the regulators stress.
The regulators’ websites include tips on how to spot and avoid investment fraud on the Internet.