ASIC fearful of telephone trickery

Australia could be a prime target for a telephone investment scam sweeping the United States with the Australian Securities and Investments Commission (ASIC) warning investors to ignore answering machine messages containing stock market tips.

The messages are designed to sound as if the caller does not realise they are leaving the hot tip on the wrong machine.

After the unwitting investor has been duped into investing and therefore raising the value of the stocks, the scam operators sell their investments at an inflated price.

Once they stop promoting the stock, the price falls and many investors risk losing money.

ASIC has alerted investors to be wary of “wrong number” messages where the caller informs their “friend” of an investment opportunity too good to miss, following warnings issued by the Securities and Exchange Commission in the US.

“Someone is being paid to leave these messages on a whole lot of answering machines and the people paying for this message to go out on hundreds or thousands of answering machines own some of this stock,” the US regulator warns.

ASIC executive director of consumer protection Greg Tanzer says the scam is an example of the inventive and ever-changing tricks scammers use to target the community.

“It appears that the scammers choose stocks that are only thinly traded and little is known about them, so the share price is easily manipulated,” Tanzer says.

Although it may seems unlikely that people would buy shares on the basis of such calls, people across the US are falling victim to the scheme and Tanzer says ASIC is keeping an eye out for copycat operators on Australian shores.

“ASIC warns people never to invest money in shares on the basis of advice from people they don’t know,” he says.