Stock-buying scams draw warning from France watchdog

France’s financial markets regulator, the Autorité des Marchés Financiers (AMF), alerted investors that scams related to stock markets are beginning to circulate, with criminals capitalizing on the situation to run a range of financial scams.

The AMF had spotted fraudulent offers to invest in stocks of blue-chip companies at a price below their official price. It also warns about an uptick in internet promotions claiming that shares of certain companies will dramatically increase.

The watchdog says it continues to receive reports of victims falling prey to scams offering to buy shares in listed companies through fraudulent platforms posing as regulated providers of “savings accounts”. It also advised members of the public to be wary of stock recommendations given on social media and messaging applications.

These are typically from overseas ‘brokers’ who target potential victims offering to sell what often turn out to be worthless or high risk shares. These callers can be very persistent and extremely persuasive, and their activities have resulted in considerable losses for some investors, the authorities said.

The AMF statement further reads:

“Retail investors receive investment proposals, for example, in a “GAFA savings account with guaranteed capital and indexation on the performance of Google Amazon Facebook Apple shares”, or a “Tesla Apple Facebook savings account”, “diversified savings accounts” based on shares of companies that are sometimes not even listed, fake “share purchase contracts” or “high frequency trading” (HFT) savings accounts. Fake intermediaries also offer to buy Française des Jeux (FDJ) shares at an allegedly discounted price. The AMF had already warned the public about these fraudulent proposals to buy FDJ shares in November 2019.”

Among the most prevalent scams attempting to take advantage of the coronavirus outbreak were fraudsters urging people to invest in new stocks related to the disease.

Another common scam is “pump and dump” schemes related to some penny stocks where fraudsters try to boost its price by sharing positive, but fake, information. In this case, they claim that a company managed to detect coronavirus cases or to develop a new cure to prevent the infection.

Phishing and other malicious email campaigns have also been running rampant on internet platforms since the outbreak began. Emails and websites promising vital information about keeping safe from the pandemic attempt to steal passwords and personal information, including credit card numbers.

It is not just the novice investor that has been deceived in this way, the AMF says, as many of the victims have been successfully investing for several years. They are thus advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports.