SEC Warns of Form 4 Investment Scams

The Securities and Exchange Commission (SEC) has announced that investors should be on the lookout for fraudulent claims using Forms 4. A Form 4 is filed when investment insiders (officers, directors and anyone holding 10% or more in company securities) execute transactions. A Form 4, which must be filed within two days following a transaction, serves to inform the public of the insider’s transactions in company stock and other securities. Apparently, scammers and fraudsters are posing as brokers and providing false Forms 4 and other official documentation to investors in order to sell them fake shares. By using forms that appear to be sent from the SEC and other regulatory agencies, scammers seek to legitimize fraudulent claims. There are some things investors can look out for if they have been contacted by someone claiming to be a broker or have received a Form 4 or other official-looking documentation confirming an unfamiliar transaction.

Spotting a False Form 4 Filing

• The SEC does not send trade confirmations to investors
  • This remains the duty of the broker-dealer who completed the transaction
• A Form 4 should not serve as a confirmation of transaction
  • Forms 4 are meant to serve as transaction disclosures only, not confirmation
• Confirm Form 4 filings
  • SEC-supplied database EDGAR can verify the legitimacy of a supposed Form 4 filed on your behalf

Spotting Fraudulent SEC Documentation

Many investment scams are passed off using official-looking documentation. Below are a couple tips for spotting a fraudulent correspondence for scammers.

• Check Broker Registration
  • If you have been contacted by someone claiming to be a broker, you can check their background and registration status.
  • Use the SEC’s Investment Adviser Public Disclosure database to search any financial professional
• Confirm Domain Addresses
  • Fraudsters will often send correspondence that appears to be from an official source, such as the SEC.
  • SEC states that many Form 4 scams were perpetrated through emails linked to edgarlink.us domain name.
  • Be wary of any seemingly governmental emails that don’t end in .gov, .mil, or .fed.us