SC Releases Findings on Clone Firm Scams in Order to Raise Investor Awareness
The Securities and Exchange Commission (SEC) has released the findings of its investigation into ten clone firm scams in order to provide investors with a better understanding of how to spot and avoid these scams.
According to the regulator, clone firm scams are generally companies that fraudulently impersonate a legitimate or licenced entity, such as misusing a public listed company’s (PLC) name and logo, corporate credentials, and website, to dupe investors and solicit funds.
The investigation by the SC reveals that the typical mode of operation would include:
- Using social media platforms such as Facebook to entice investors with investment packages that promise high returns and appear to be managed by “licenced intermediaries.”
- Using a large number of “agents” to entice potential victims and soliciting investments via Whatsapp chats after the victims clicked on the provided link.
- Victims are being asked to deposit funds for “investment schemes” into bank accounts held by mule account holders in order to layer and launder the illegal proceeds received.
According to the SC investigation, at least 32 mule account holders have been identified as being involved in facilitating the operators of these scams. Its investigation revealed that, given the large number of victims, the scam operators generated a large amount of illegal proceeds.
“In one of the scams, approximately RM3.6mil have flowed through one mule bank account within a period of six months. “The SC also discovered that at least RM24.7mil may have flowed to several masterminds of these scams based on the 154 bank statements reviewed,” the SC said.
The findings also revealed that clone firm scams will target victims/investors who are willing to part with a small sum of money in exchange for the promise of large returns in a short period of time. Given that the majority of scam victims lost only a small amount of money, many were hesitant to come forward and cooperate with the SC’s investigation into the scams.
15 of the 24 victims identified refused to cooperate with the SC. The SC is currently reviewing existing data and evaluating various enforcement options against those involved in the clone firm scams in order to crack down on these illegal activities,” it said.
The Supreme Court has reiterated that investors must play their part by exercising vigilance and skepticism when evaluating investment opportunities, such as checking the credibility of individuals or entities who approached them to invest in any investment scheme or investment opportunities advertised on social media and Whatsapp chats.
More importantly, investors are advised to never deposit money into any individual’s personal bank account when asked to do so. To report suspected scams, investors should contact the SC’s consumers and investor office at 03-6204 8999 or [email protected]
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The Securities and Exchange Commission has revealed the method of operation of clone firm scams
In order to raise awareness about the operation of clone firms, the Securities Commission Malaysia conducted an investigation into ten clone firm scams and is sharing the findings with investors.
Clone firm scams are businesses that fraudulently impersonate a legitimate or licenced entity, such as using the name and logo of a publicly traded company’s corporate credentials and website to defraud investors and solicit funds.
According to the SC’s investigation, the modus operandi would typically involve placing advertisements on social media platforms such as Facebook to entice investors with investment packages that promise high returns and appear to be managed by “licenced intermediaries.
” Using a large number of “agents” to entice potential victims, soliciting investments via Whatsapp chats after victims clicked on the link provided, and requesting victims to deposit funds for the “investment schemes” into bank accounts held by mule account holders in order to layer and launder the illegal proceeds received.
During the investigation, SC discovered at least 32 mule account holders who were identified as being involved in facilitating the operators of these scams. It also revealed that the scammers generated a large amount of illegal proceeds due to the large number of victims.
Within six months, approximately RM3.6 million passed through one mule bank account in one of the scams. The SC discovered that at least RM24.7 million may have flowed to several “masterminds” of these scams based on the 154 bank statements reviewed.
The findings also revealed that clone firm scams will target victims/investors who are willing to part with a small sum of money in exchange for the promise of large returns in a short period of time. Given that the majority of scam victims lost only minor sums of money, many were hesitant to come forward and cooperate with authorities in their investigation of the scams.
15 of the 24 victims identified declined to cooperate. To combat these illegal activities, the Supreme Court is currently reviewing available evidence and considering various enforcement options against those involved in clone firm scams.
The role investors need to play
The Commission would like investors to play their part by exercising vigilance and skepticism when evaluating investment opportunities, particularly when they are marketed through social media and Whatsapp chats.
Investors are also advised not to deposit money into any individual’s personal bank account and to consult the SC’s Investor Alert List for information on unauthorized websites.
Finally, report any suspicious activity or communications to the Chargebacking experts. You can successfully keep your money safe with Cash and avoid scams by following a few of the steps identified by the professionals at Chargebacking.
Take your time, as you would with any other type of investment, and avoid making rash financial decisions. Consider hiring a financial advisor to teach you about trading and help you create a comprehensive financial plan. Finally, don’t be shy about asking a lot of questions!
For more information on scam prevention please visit https://chargebacking.com/
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