Pretends to be a stock expert
Pump-and-dump and pre-IPO scams
Is a stock tip or pre-IPO share offer from a stranger a scam?
Often yes. Hyped stocks crash after the promoters sell, and pre-IPO shares may not exist. Do not buy from unsolicited offers.
Almost always fake. Stop, then check by calling a number you already have.
Also searched as: stock tip, penny stock, pre-IPO shares, stock professor, WhatsApp stock group
Draft: we're still checking this page. The quotes below are word for word from their sources.
What to do
On the phone right now?
- Stop. Hang up or close the message. Don't tap anything.
- Check. Call a number you already have, like the one on your card or bill.
- Talk to someone you trust before you pay anyone.
If anyone is in danger right now, call 911.
If you already paid
- Call the company you paid through right away: your bank, card company, gift card company, or the wire or Zelle service. Ask them to stop or reverse the payment.
- Call the Justice Department's National Elder Fraud Hotline at 1-833-372-8311, Monday to Friday, 10 a.m. to 6 p.m. Eastern.
- Report it at ReportFraud.ftc.gov. If it happened online, report it at IC3.gov too.
General information, not legal or financial advice. If you've lost money, contact your bank and report it.
How it works
1 They reach you by
- Text message
- Social media
- Website
2 They pretend to be
- Investment expert
- A new love or friend
3 They ask for
- Money
- Personal details
- Tap a link
- Wire or Zelle
What it can look like
Example pattern, not a real message
Pretends to be a stock expert. What gives it away:
- Send a wire or Zelle
- Give your ID numbers
- Use their link
Warning signs
- They push you to send a wire transfer or Zelle payment. That money is very hard to get back.
- They contacted you, then ask for your Social Security, Medicare or bank numbers.
- They want you to use their link or their phone number. Look up the real website or number yourself.
- They say you must pay right now or something bad will happen. Real organizations give you time to check.
Why we say this
Avoiding Pump-and-Dump Scams
Fraudsters hype a cheap stock in text messages, social media, or private group chats to push the price up. Then they sell all their shares fast, and everyone else loses money. Some use fake 'investment clubs' or friendly strangers to build trust.
While fraudsters typically reached out to targets in the past via word of mouth or cold telephone calls, they’re increasingly communicating out of public view through texts and encrypted messaging applications.
3 more quotes from this source
The fraudsters generally include a time component to their pitch, stressing that if you don’t act immediately, you’ll never get another chance.
After befriending you, they might quickly turn the conversation to a “can’t lose” investment. In these situations, it’s best not to engage.
And if someone offering you investment advice asks you to send a screenshot from your account confirming you executed a trade, disengage—this is a common scam tactic.
Know the Risks of Pre-IPO Funds and Potential Fraud
Strangers offer a chance to buy shares of a famous private company before it goes public. Some of these offers are scams, and the shares may not exist. They often come by unsolicited email, text, or social media ads.
In some cases, though, a social media advertisement or unsolicited email claiming to have shares of a “hot company” might very well be a scam.
4 more quotes from this source
Legitimate pre-IPO opportunities don’t typically arrive in your inbox or in text messages from unknown senders.
An unsolicited offer to buy pre-IPO shares raises the question: Why would a total stranger tell you about a great investment opportunity? The likely answer is that there’s no such opportunity.
Scams almost always involve urgency, “exclusive” access, steep discounts, or claims of association with a well-known firm.
Funds for a legitimate investment should go to a registered firm or a regulated custodian and never to a personal account or a wire to an individual.
Social Media and Stock Tip Scams – Investor Alert
Ads on social media promise stock tips and huge returns. Clicking one can put you in a group chat with a fake 'adviser'. After you gain trust, you are urged to buy small stocks that then crash, and you lose most of your money.
When you click on one of these ads, you may get automatically added to a social media group chat.
5 more quotes from this source
The next thing you know, you are messaging with someone who purports to be an “investment adviser” (and/or their “assistant”) and recommends that you buy shares of specific well-known companies.
If you follow the recommendations and see returns on these investments, you may begin to gain a false sense of trust.
The next thing you know, the stock price plummets and you lose most of your investment.
Every investment has risk, and the potential for high returns usually comes with high risk. If it sounds too good to be true, it probably is.
Always check the background of someone offering you an investment and be aware that fraudsters may impersonate registered brokers or investment advisers on social media.