Financial advisors continue to be targets of bad actors seeking to leverage their identities to harm the public; this week, securities regulators in California said that a veteran financial advisor’s name had been used on messaging applications to contact investors and induce them eventually to invest in cryptocurrencies.
According to an alert Monday from the California Department of Financial Protection and Innovation, an unnamed person is contacting consumers through text messages and messaging platforms, such as Telegram and WhatsApp, while falsely claiming to be Douglas Boneparth, a licensed Investment Adviser representative.
Spoofing on WhatsApp refers to various deceptive techniques used by scammers to impersonate trusted individuals, including financial advisors, to steal personal data, money, or account access.
“It’s never a bad time to tell clients to be more vigilant, especially as these schemes become more sophisticated,” said Boneparth, president of Bone Fide Wealth in New York, in an interview Tuesday morning.
“The victim here reached out to their state regulator,” he said. I have a large presence in financial media and social media, and these schemes are piggy-backed off someone’s authority and strong reputation.”
Financial advisors and industry executives repeatedly stress that any offer of investment advice or buying and selling securities via a platform such as WhatsApp is a glaring red flag; firms and advisors can only buy and sell securities through regulated and licensed platforms like broker-dealers and registered investment advisors.
According to California regulators, the bad actor in this instance, under false pretenses, attempted to persuade consumers to open accounts on the financial services platforms Uphold and Equator to invest in cryptocurrencies.
Messaging apps like WhatsApp and email platforms like Gmail are beginning to play an outsized role in advisor communications, a trend that could increase as more clients choose to communicate via their smartphones.
But wealth management firms are facing more pitfalls than fines when it comes to WhatsApp. Now, the phenomenon of fake wealth management executives and advisors popping up on WhatsApp can be added to the long list of potential scams and frauds that financial advisors, their firms, and their clients must watch out for in the age of digital communications.
“A non-client indicated to California that they were subject to a scam from someone impersonating me and lost money to that person,” Boneparth said. “The scam was specifically related to Crypto exchanges I’ve never heard of, and I’ve been an early adopter of Bitcoin.”
The use of unmonitored messaging apps by financial advisors and employees at wealth management firms has been on the rise in the wake of the COVID-19 pandemic, which reshaped how advisors interact with colleagues and clients.
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