Internet scam targets state securities regulators
An organization of state securities regulators, whose goal is to protect investors from fraud, says it has been the victim of an attempted Internet scam.
New York: An organization of state securities regulators, whose goal is to protect investors from fraud, says it has been the victim of an attempted Internet scam.
The North American Securities Administrators Association, or NASAA, told the operator of a Web site which represented the "State Securities Commission" to cease operations and to shut the site down on Wednesday. The site was using content from NASAA`s Web site, possibly for unlawful purposes, Washington-based NASAA said in a statement.
The mock site, which appeared to be offline by late Wednesday, is one of several fake regulator Web sites that have surfaced in recent years, said Jack Herstein, NASAA`s president.
"We are concerned that con artists are attempting to cash in on our reputation for effective investor protection to lure others into an illicit scheme," Herstein said in a statement.
There are no legitimate state securities regulatory agencies affiliated with the "State Securities Commission" or SSC Web site, said Herstein, who also heads Nebraska`s banking and finance department.
A review of the SSC Web site by Reuters earlier on Wednesday revealed similarities to NASAA`s site. For example, it featured modified versions of NASAA news releases, including the announcement about the scam.
But there was at least one stark difference - the fake site urged investors who had suffered unjustified market losses to file "claims." Clicking on the link led to a series of tax and other forms that asked for personal information.
A person who answered the phone at the number posted on the SSC Web site told Reuters, "What we do is classified. We don`t entertain any public inquiries."
"If you don`t have a special agent to advise you, we`re not authorized to give out any information," he said. The site wasn`t functional by Wednesday evening.
The so-called "special agent" reference could suggest a two-step operation in which con artists make cold-calls to find victims and direct them to call the number on the Web site, according to NASAA spokesman Bob Webster.
The person who answers may ask victims to name the "special agent" who referred them. That enables con artists to ensure that callers are pre-screened by someone in their operation -- which helps conceal the scam from the general public.
"We really have no way of knowing what these folks may be up to, but it`s clear from looking at the Web site that it`s not what it says it is," said Webster. He confirmed on Thursday that the site was shut down.
Bogus Web sites represent a very small but "treacherous" segment of the Internet, said Andrew Stoltmann, a Chicago-based securities lawyer who represents investors.
Most of the operations are based overseas where con artists often try to evade the reach of US laws, Stoltmann said. "They`re out to scam investors and are effective to the people who buy into it," Stoltmann said.