Finance

A Fake Bill Ackman ‘Pump & Dump’ Scheme Scams Millions

A Bill Ackman imposter — and several others posing as Wall Street bigs — has lured hapless investors into “pump and dump” schemes that have cost several their life savings, in some cases, millions of dollars, The Wall Street Journal reports.

Ackman’s Pershing Square Capital Management hedge fund has found more than 90 ads pretending to be him, one promising annual returns of 125%.

Many of the ads remained on Facebook weeks after the company flagged them to the social media platform. Even when the ads were removed, similar offerings popped up.

“It’s like a game of whack-a-mole,” says Pershing spokesman Fran McGill. “It’s a huge problem, and all social media companies need to do more to prevent people from being scammed like this.”

Thousands of fake ads have also appeared for Cathie Wood’s ARK Investment Management, Peter Lynch of Fidelity Investments, Ray Dalio of Bridgewater Associates, and hedge fund manager Steve Cohen, who also owns the New York Mets.

One Nashville couple lost $1.3 million in a fake Wood plot, nearly all of their savings; had to file for Social Security early; and are now trying to go back to work, says their lawyer Josh Kons.

Thinking they were getting stock tips from the legendary ARK hedge fund manager, the couple first earned profits on four out of five U.S. stock picks in October and November. In December, they invested in a Hong Kong stock that delivered a whopping 15% return in just four days.

They ramped up their investments with two Hong Kong penny stocks in late December, DreamEast Group and Super Strong Holdings — which tanked by 90% and 98% the same day.

In hindsight, Kons said, it is clear that no more than a few of the 30 members in the WhatsApp group where the couple got taken were real people.

“I’m amazed at how sophisticated the operators were,” Kons says.

Peter Bourget, a construction company owner in Atlanta who lost $45,000 on penny stocks that nosedived, uses the very same language: “They were sophisticated and well-organized — but it’s still embarrassing to be taken by any scam.”

The texts, Bourget continues, “all sounded very legit at first. They put a lot of effort into building your confidence. You think it’s part of an investment club, and they have in-depth market analysis.”

Unfortunately, U.S. regulators are at a loss to protect American investors from bad actors overseas, according to Blake Snyder, senior director of the Financial Industry Regulatory Authority’s financial intelligence unit.

“We believe a majority of this activity is being orchestrated by individuals outside of FINRA’s jurisdiction, and who may be located outside of the United States,” Snyder says.

Furthermore, media attorney Kai Falkenberg says it’s not clear whether Facebook and other social media networks can be held liable; the courts are split on whether the unauthorized use of a celebrity’s likeness applies to a 1996 federal law that clears web platforms of liability for deceptive content created by third parties.

Something needs to be done. The Federal Trade Commission says reported imposter scams tripled between 2019 and 2023 to $2.7 billion.

The wrongdoing is “increasingly prevalent and harmful,” says Christopher Brown, a FTC marketing practices attorney.

As of September 2021, Meta said it had 40,000 employees, including outside contractors, working on safety and security, and that artificial intelligence blocks fake accounts. However, experts have noted that since Meta has gone through several rounds of job cuts, these efforts appear to be wavering.


© 2024 Newsmax Finance. All rights reserved.

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