Pump-and-dump schemers have found a platform for the 21st century.
Scammers took to messaging app WhatsApp to convince users to buy shares of over-the-counter stock Avra, before shedding their stake at a higher price, the Financial Industry Regulatory Authority said in a notice Wednesday. Some app users received messages, apparently from employees of well-known brokerages, saying Avra was "going to double in the next few days."
FINRA warned investors to use caution if they see any similar offers on messaging apps.
"Scammers keep up with the times. If you are using a messaging app and receive a tout claiming that a stock is poised for explosive growth, don't respond—just delete," said Gerri Walsh, FINRA's senior vice president for investor education.
In pump-and-dump schemes, famously detailed in "The Wolf of Wall Street," scammers convince individuals to buy a stock, only to "dump" their shares at an elevated price and leave investors with little value. FINRA did not elaborate on when the scam took place.
However, on Aug. 21, Avra shares saw an incredible rise and fall in a span of less than two hours. The stock sat at 17 cents at 10:20 a.m. ET, spiked to 94 cents by 11 a.m. then plummeted back to 30 cents by 11:20 a.m.
"FINRA investigations are non-public. I cannot confirm the existence or non-existence of an investigation or referral to the SEC," a FINRA spokesman said in a statement.
Avra, which makes digital currency technology, and WhatsApp owner Facebook did not respond to requests for comment.