Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, October 5, 2009

FINRA Warns of ARS Phishing Scam

FINRA today issued an Investor Alert called Beware of Auction Rate Securities Settlement "Phishing" Scam, which warns the public about a scam using fake FINRA emails that promise compensation from auction rate securities (ARS) settlements in exchange for personal information. The fake emails are made to appear as if they originated from FINRA and use language from a recent FINRA press release announcing ARS settlements. They state that the email recipient is due $1.5 million regardless of the amount of their ARS investment or loss. The email then "phishes" for personal information by asking for the investor's occupation, address and phone number.

While FINRA, along with the Securities and Exchange Commission and state securities regulators, has announced final settlements with numerous brokerage firms relating to the sale of ARS, FINRA does not contact investors directly to advise them of the settlements. Instead, brokerage firms contact eligible investors, generally via letter, with an offer to repurchase ARS that the firm sold to them

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