Thinking of buying stocks and bonds using LinkedIn? Think again — they probably don’t exist.

Mario Sundar/flickr source

The SEC recently charged an Illinois man with trying to sell non-existent securities using, of all outlets for scams, LinkedIn. According to the SEC, Anthony Fields of Lyons, IL used LinkedIn discussions to “to promote fictitious ‘bank guarantees’ and ‘medium-term notes,'” in an attempt to fleece investors, while they networked and looked for work, apparently.

Fields represented himself as a licensed broker-dealer and claimed to be operating an assets management firm in charge of over $400 million. While Fields did not manage to get any customers for the imaginary securities, “multiple” people messaged him, expressing interest.

This went on, according to SEC documents, from March 2010 until the present. Apparently Fields forgot the old maxim: Always be closing! In almost two years trying to trade $500 billion in nonexistent US Treasurys he didn’t sell one? Not one?

Maybe it’s because he was trying to sell securities on LinkedIn.

But while LinkedIn users were savvy enough not to take Fields’ bait, others might not be so wise. Recall that people have fallen for Nigerian Spanish Prisoner scams, time and again. And the more mainstream social media becomes in the business world, the greater the opportunity for more sophisticated versions Mr. Fields’ scheme to emerge.

“As investment advisers increasingly utilize social media to communicate with clients and potential clients, firms need to be mindful of the applicable standards governing those communications,” said Director of the Office of Compliance Inspections and Examinations, Carlo di Florio, in a prepared statement.

The SEC accompanied the press release with an official Investor Alert on avoiding fraud when dealing with social media and investing. The brief offers common sense tips to investors, including: be suspicious of unsolicited offers, be suspicious of offers that are too good to be true, be wary of “guaranteed” returns, ask questions, and the like.

More interestingly, the SEC also highlights their concern that social media could enable scammers to fool investors in new ways. Twitter, for example, could be used to make pump-and-dump schemes easier to perpetrate; by spreading the word about a penny stock’s supposed surge, scammers could pump up the value of the stock and leave their victims in the lurch. Even hedge funds have expanded into using Twitter to generate leads for stock tips. This provides fertile ground for scammers to use social media to generate phony buzz around penny stocks.

Be careful out there! And hat tip to Dealbook, who picked this up first.

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