Personal Finance

The Commodities Futures Trading Commission (CFTC) and the Financial Industry Regulatory Authority (FINRA) are jointly issuing this Investor Bulletin to make investors aware of frauds involving investments in physical precious metals, in particular those involving self-directed individual retirement accounts (SDIRAs).

Did you know there’s a difference between the date you trade a security and the date the transaction settles? Trade date is the day your order to buy or sell a security is executed; settlement date is the day your order is finalized and on which funds and the securities must be delivered. Currently, settlement date occurs two business days after trade date, but recent rule amendments from the Securities and Exchange Commission (SEC) and conforming FINRA rule changes will soon make that cycle one day shorter.

The Securities and Exchange Commission (SEC) Office of Investor Education and Advocacy, the North American Securities Administrators Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) are jointly issuing this investor article to make investors aware of the increase of investment frauds involving the purported use of artificial intelligence (AI) and other emerging technologies. Individual investors should know that bad actors are using the growing popularity and complexity of AI to lure victims into scams.

Are you considering investing in low-priced securities? You might have heard that they’re a good way to make a profit without spending much. But how much do you know about these securities?

FINRA has seen a recent significant spike in investor complaints resulting from recommendations made by fraudulent “investment groups” promoted through social media channels. Complaints received by FINRA and posted on social media describe bad actors, posing as registered investment advisers, who initially advertise “stock investment groups” on Instagram and other social media channels and then turn to encrypted group chats on WhatsApp to communicate with interested investors and pitch investments.

Among the wide range of hacking techniques known collectively as social engineering, pretexting is a tactic that hinges on telling a compelling (and, spoiler alert, fake!) story.

With pretexting, hackers attempt to deceive their targets by establishing a false sense of trust. The hacker uses a fabricated story, or pretext, to get you to download malware, send money or share sensitive information, to name a few examples. As you can imagine, this is a very risky game with serious ramifications if the hacker is successful.

You probably wouldn’t dream of leaving piles of cash lying around your home. But many investors end up doing this with cash in their brokerage accounts. Uninvested cash is a potentially valuable part of your investment portfolio. So it pays to pay attention to it, especially when interest rates move up or down. You should know the facts about your uninvested cash, the different cash management programs available and questions to ask.

When securities are listed on a centralized exchange, such as the New York Stock Exchange or Nasdaq, transaction information such as price and trade history is readily available to investors through the exchange. But how can you get information about bonds and other fixed income securities that are not listed on a national securities exchange? Information about these securities, known as over-the-counter (OTC) debt securities, is provided by TRACE^®—the Trade Reporting and Compliance Engine^®.

As an individual investor, there are several ways in which you can hold securities. Many investors hold them in “street name.” This means that the shares are registered with the issuer under the name of an intermediary, typically your brokerage firm, that maintains electronic, “book-entry” records showing you as the real or “beneficial” owner.

There’s a strategy for trading options that’s generating quite a bit of buzz: trading an option contract with zero days to expiration (0DTE). An online search will generate many results with information about this trading strategy, which has become more common recently as expirations in certain options have expanded to practically every day of the week. Though the topic is hot, selling and buying options with zero days to expiration can be risky.