US regulators have charged a financial advisor with trying to sell $500bn of fake securities on LinkedIn, amid warnings to investors and advisory firms about the risks of buying through social networks.
The Securities and Exchange Commission (SEC) alleges [PDF] that Illinois-based Anthony Fields offered hundreds of billions of dollars in fraudulent securities through a few networking sites, including LinkedIn.
Fields, it is claimed, put bank guarantees and medium-term notes from financial institutions, including Credit Suisse, HSBC, BNP Paribas and RBS among others, up for sale on the sites, adding "if you are interested you can email for particulars".
The securities were, SEC alleges, offered through the firms Anthony Fields & Associates (AFA) and Platinum Securities Brokers, both of which were owned and operated solely by Fields.
Fields – who was at one time registered with the commission as a broker but had allowed his registration to lapse – is also accused of pretending that AFA had $400m worth of assets under management and a $50bn contract to trade US Treasury securities as well as falsely claiming that Platinum was a registered dealer.
SEC has not claimed that the alleged trickster made off with any cash, but said he had received interest from "multiple purported potential buyers".
"Fraudsters are quick to adapt to new technologies to exploit them for unlawful purposes," said Robert Kaplan, co-chief of the commission's enforcement division's asset management unit. "Social media is no exception, and today’s enforcement action reflects our determination to pursue fraudulent activity on new and evolving platforms."
As well as charging Fields, the commission also issued two alerts to the financial world about investment advisory firms' use of networking sites.
The first warned investment advisory firms that are using, or want to use, the likes of Twitter, Facebook and LinkedIn to advertise their services are still subject to federal securities laws, including anti-fraud, compliance and record-keeping provisions.
The second gave tips to investors on avoiding fraud on networking sites, including the time-honoured advice that if it sounds too good to be true, it probably is. ®
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