Beware of Scam Involving the Misuse of SIPC's Name

WASHINGTON, D.C. – October 9, 2018 – The Securities Investor Protection Corporation (“SIPC”) re-issues its warning to investors and the general public of a scam involving the misuse of SIPC’s name. SIPC protects customers of failed securities brokerage firms in liquidation under the Securities Investor Protection Act.

If a SIPC-member brokerage firm fails and if customer securities or cash are missing, SIPC will work to recover them for distribution to customers.

Recently, SIPC learned of two instances in which an individual or business pretending to be affiliated with SIPC sought money from investors allegedly to help the investors recover funds owed to them by their investment firm. The investors allegedly were told that they must pay the fraudster, in advance, a percentage of the owed sum to complete the recovery process. The representations made were false. The fraudster corresponded with the investors by e-mail, using an e-mail address that mimicked the name of a real investment firm. The fraudster’s objective was to deceive the investors into believing that they were dealing with the actual firm.

Investors should be aware of the following:

• Customers will never be asked by SIPC to pay any amount to assist in the recovery process in the liquidation proceeding or to process customer claims.
• Pending customer protection proceedings are listed on SIPC’s webpage at http://www.sipc.org/cases-and-claims/open-cases. The webpage also contains information about each case and contact information for the trustee overseeing the liquidation.
• A SIPC liquidation proceeding always takes place under the supervision of a federal Bankruptcy Court.
• Only the court-approved trustee and counsel in the proceeding generally are authorized to recover customer property.
• The trustee and counsel are paid for their services with brokerage firm funds or, if such funds are unavailable, out of SIPC funds. Such compensation is subject to approval by the Bankruptcy Court.
• All amounts recovered for customers are shared pro rata by customers and distributed in the liquidation proceeding, with court approval.
• In a liquidation, SIPC does not “commission” individuals or businesses to recover assets for any individual customer.

Should you have a question about a notice or unsolicited call that you receive that involves SIPC, or if you are the subject, or suspect that you may be the target, of such a scam, or otherwise become aware of a misuse of SIPC’s name, SIPC asks that you report the fraud or potential fraud to SIPC by contacting us or by telephone at 202-371-8300.