The SEC on Tuesday issued an updated investor alert concerning scams purporting to sell pre-IPO shares of companies, including such social media firms as Facebook and Twitter. In addition, it announced actions it has taken against, among others, a Florida man who was fraudulently selling securities of an investment vehicle he claimed held pre-IPO shares of Facebook.
There have been, said the SEC, numerous complaints and inquiries about such scams, which are commonly promoted through social media as well as by more conventional means such as mail, telephone, and personal conversations.
The SEC says that, while legitimate offerings of pre-IPO shares in a company can be found, unregistered offerings could violate federal securities laws unless they meet a registration exemption, such as the restriction of a private offering only to “accredited investors,” those who meet certain income or net worth requirements.