US regulators have cautioned the public to be circumspect about bogus investment plans being offered through social media sites
US regulators have cautioned the public to be circumspect about bogus investment plans being offered through social media sites.
The ‘risk alert’ was sounded by the Securities and Exchange Commission (SEC), after an Illinois-based investment adviser Anthony Fields tried to sell fraudulent securities through LinkedIn and other social networking sites by luring investors by offering more than $500bn in fake securities.
According to SEC officials, they have been detecting more fraud cases involving the use of social media of late.
According to Reuters, industry rules require advisers to archive all electronic communications for a three-year period. These include e-mails and messages advisers send to clients through social networks.
But, some investment advisers are now relaxing these rules by allowing the use of social networking sites, according to SEC.
SEC staff point out that a "lack of specificity may cause confusion as to what procedures or standards apply to social networking use."