Social Media and Stock Tip Scams

The SEC’s Office of Investor Education and Assistance (OIEA) and Division of Enforcement warn investors that scams involving stock recommendations may be conducted through social media. Investors should never make investment decisions based solely on information from social media platforms or apps.

Watch Out For Stock Tip Red Flags.

Did you click on an advertisement online or on social media, and get added to a group chat focusing on investments?

Has someone contacted you through social media claiming they are a famous investment professional or an employee of a registered investment adviser or registered broker?

Have you been promised high investment returns with little or no risk?

If someone misrepresents that they are registered or impersonates a registered investment professional, report it to the SEC. To learn more, visit our Impersonation Schemes webpage on Investor.gov.

 

Stock Recommendations You Receive Through Social Media May Be Part of an Investment Scam.

You likely have seen ads online or on social media platforms that promise stock tips. Some of these ads may purport to be affiliated with a well-known individual in the finance and investing industry. They may promise astronomical investment returns, including 100 percent or more.

When you click on one of these ads, you may get automatically added to a social media group chat. The next thing you know, you are messaging with someone who purports to be an “investment adviser” (and/or their “assistant”) and recommends that you buy shares of specific well-known companies.

If you follow the recommendations and see returns on these investments, you may begin to gain a false sense of trust. Once the so-called investment adviser has your trust, you may be advised to purchase shares of relatively smaller companies (including companies listed on major U.S. stock exchanges) and to send screenshots of your purchases to the “adviser.” The next thing you know, the stock price plummets and you lose most of your investment.

SEC staff created the following mock promotion to show you the type of message you may receive in a real scam:

Fraudsters Can Manipulate a Stock’s Share Price to Profit at Your Expense.

Fraudsters can manipulate the share price of a company’s stock (either positively or negatively) by spreading rumors on social media. Fraudsters then profit at investors’ expense. For example, fraudsters may use social media to increase a company’s share price including through:

• Pump and dump schemes – pumping up the share price of a company’s stock by making false and misleading statements to create a buying frenzy, and then selling shares at the pumped up price. 
• Scalping – recommending a stock to drive up the share price and then selling shares of the stock at inflated prices to generate profits. 
• Touting – promoting a stock without properly disclosing compensation received for promoting the stock.

In other instances, fraudsters start negative rumors urging investors to sell their shares so that the stock price plummets and then the fraudsters take advantage by buying shares at the artificially low price.

Fraudsters may promote a stock or spread negative rumors about a stock through social media anonymously or while pretending to be someone else. Fraudulent stock promotions on social media can take various forms, including memes.

Additional Information

Common Scams | Investor.gov

Group Chats as a Gateway to Investment Scams – Investor Alert

FINRA Investor Alert: Social Media ‘Investment Group’ Imposter Scams on the Rise

Thinking About Investing in the Latest Hot Stock? Understand the Significant Risks of Short-Term Trading Based on Social Media

Social Sentiment Investing Tools —Think Twice Before Trading Based on Social Media

Report possible securities fraud to the SEC.

Ask a question or report a problem concerning your investments, your investment account or a financial professional.

Visit Investor.gov, the SEC’s website for individual investors. Receive Investor Alerts and Bulletins from OIEA by email or RSS feed.

Feb. 6, 2026

This Investor Alert represents the views of the staff of the Office of Investor Education and Assistance. It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This Alert, like all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.

RISK DISCLOSURE: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

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