Investors across Canada have been warned by regulators that fraudulent stock promotions are being sent via smartphone messaging apps like WhatsApp. A spike in the number of cases involving smartphone apps to generate interest in stock promotions has been identified by the CSA (Canadian Securities Administrators).
Canadian investors have been cautioned that spam is being sent on a variety of smartphone apps. However, the app most frequently targeted by the fraudsters has been WhatsApp, the popular app that enables users to exchange instant messages without paying for an SMS.
But it isn’t only Canadian authorities that have seen a spike in the number of cases involving smartphone app spam, as US regulator, the Financial Industry Regulatory Authority (FINRA), also recently issued a warning to investors to watch out for spam.
The CSA believes the recent spike is related to a sharp rise in the number of ‘pump and dump’ schemes operated by fraudsters at the moment. A pump and dump scheme is one that seeks to create an artificial interest in a certain stock by talking up the benefits of investing in the company and convincing people to invest in it.
“What investors don’t know is that the person or company touting the stock owns a large amount of it. As more and more investors buy shares, the value skyrockets. Once the price hits a peak, the scam artist sells their shares and the value of the stock plummets. Investors are left holding worthless shares,” the CSA said in one of its recent alerts sent to Canadian investors.
In the US, one of the most notable spikes in instant messaging spam involved Avra Inc., with messages like Avra Inc. is “going to double in the next few days” now commonplace on WhatsApp. Investors are advised to ignore all promotional spam.