New Scam Aims to Hit Victims Twice

Last Updated Jun 17, 2011 1:20 PM EDT

If you lost money to a fraudulent investment in the past, you're now a target of a new fraud that's using the name of the Securities Investor Protection Corp. to scam you twice.

SIPC, which backs investments by ensuring that investors receive the cash and securities held by failed brokerage firms, is warning today that it has received multiple reports about consumers being contacted by con artists pretending to represent the agency. The con artists know that the investor has already lost money in an investment fraud and pretend that they're attempting to recover the lost funds.

The tip-off that it's a scam is that the faux "agent" then requires one of two things: that you fill out a form, providing a host of personal information including your Social Security number, or that you pay an up-front fee.

SIPC never requires a fee to return investor funds; it also already has information about investors in the brokerage firm's records. If you have submitted a SIPC claim and think the agency could require more information from you, go directly to SIPC. Do not respond to a solicitation.

"Any individuals contacted by supposed representatives of SIPC who request an upfront fee or personal information should be extremely wary," says SIPC President Stephen Harbeck.

SIPC officials do not know how the con artists got the contact information of scammed investors. But has referred several victims to law enforcement authorities in an effort to sort it out.

In the meantime, the agency asks anyone who thinks they might be a victim of this scam to call or email the agency and report it at or (202) 371-8300.

Kathy Kristof is the Author of Investing 101.

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