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    As SEC charges first brokerage to run afoul of new investor protection rule, here's how to find a good financial advisor

    It may seem daunting to find a good and trustworthy financial advisor or broker.
    There are steps consumers seeking investment advice can take to protect themselves.

    Thomas Barwick

    Finding a broker or financial advisor you can trust may, at times, seem a daunting task.
    That’s especially true when investors see sensational stories of brokers fleeing the police in an underwater getaway or faking their death in an airplane crash. Then there are the high-profile fraudsters such as Bernie Madoff, who masterminded the nation’s biggest investment fraud in history — a Ponzi scheme that cost tens of thousands of investors up to $65 billion.

    And there are, of course, less sensational but still notable events. The Securities and Exchange Commission charged a brokerage — Western International Securities Inc. — and five of its brokers on Thursday with violating a new rule that aims to raise investment-advice protections for consumers.  
    More from Personal Finance:36% of high earners are living paycheck to paycheckHere are three ways to navigate college tuition bills43% of homeowners delay home improvements due to inflation
    The brokers allegedly sold more than $13 million of high-risk, unrated bonds to retirees and others, despite the bonds being inappropriate for these investors due to their illiquidity and speculation, according to the SEC release. The brokerage didn’t respond to a request for comment.
    It’s the first time the SEC has filed a lawsuit in connection with Regulation Best Interest, which the federal agency issued in 2019 and firms had to comply with by June 2020. Overall, the rule generally requires brokers and firms to put a client’s interests ahead of their financial or other interests when making an investment recommendation. They must share some of the logic behind a recommendation and disclose conflicts of interest.
    There were 690,000 registered brokers and financial advisors in 2021, according to the Financial Industry Regulatory Authority, or FINRA. Here are some tips for consumers to find one they can trust.

    Heed red flags in regulator databases, online searches

    Oliver Rossi

    There are some surefire warning signs that an advisor you’re considering may not be a good pick. 
    Financial regulators have online databases consumers can reference for background information on specific individuals and firms. The SEC has one, the Investment Adviser Public Disclosure website, for financial advisors. FINRA’s resource, BrokerCheck, lists brokers. (A person or firm may appear in both.)
    First, check to see that the person appears in either system and that they are licensed or registered with a firm.

    This means they have met a minimum level of credentials and background to work in the industry, according to Andrew Stoltmann, a Chicago-based attorney who represents consumers in fraud cases.
    “If they’re not, that’s the uber-red flag,” Stoltmann previously told CNBC. “If not, it could be some guy cold-calling from his mom’s basement.”
    Prospective clients should also Google the advisor or broker’s name to see if any news articles about past indiscretions or lawsuits appear. If so, it’s another bad sign. The regulatory databases will also list any disclosures, complaints, arbitrations or settlements involving the individual.
    Experts recommend checking for nefarious financial behavior such as sales abuse practices, unsuitable recommendations, and excessive or unauthorized trading.

    Review account statements for other warning signs

    Asia-pacific Images Studio | E+ | Getty Images

    However, just because these warning signs aren’t initially found doesn’t mean consumers should let their guard down. There are other signals to watch for after deciding to trust an advisor with your money.
    One of the lessons from Madoff’s multibillion-dollar fraud was ensuring your money is being held at a reputable, third-party custodial firm such as Fidelity or Charles Schwab, Stoltmann said.
    That makes it much harder for an advisor to steal money or take advantage of a client, since the assets aren’t held in-house and clients aren’t making checks out to the advisory firm, he said.
    Think of this as a firewall like two-factor authentication — the custodial firm has certain procedures for withdrawing money, which often involve contact with the client, Stoltmann said.

    Customers can check their regular account statements for this information.
    Further, losing money isn’t necessarily a red flag, especially if it occurs in a down market.
    But it might be a bad sign if an investor’s portfolio is tracking well below customary stock and bond benchmarks, according to George Friedman, an adjunct law professor at Fordham University and a former FINRA official.
    “At some point you start asking questions,” he told CNBC.

    Hyper trading activity, as outlined in an investor statement, is another telltale sign. Such account churning generates fees and commissions for advisors but financially harms the client.
    Proprietary investments — for example, owning a mutual fund run by your brokerage firm — aren’t necessarily a fraud signal, but may be a sign that an advisor or firm is making money at your expense, Friedman said.
    “I’d review account statements every month,” he said. “If you see something funny or unusual, that’s a flag.”
    Of course, investor statements could be doctored to hide such information.

    Ask questions about investment recommendations

    Hispanolistic | E+ | Getty Images

    Unsatisfactory or delayed responses to client questions should prompt clients to escalate their case to the firm’s compliance department.
    Being asked to communicate outside of an advisory firm’s official channels, such as company email, is also a major red flag.
    And, importantly, understand your investments; only place your money with reputable asset and fund managers, experts said. If you can’t understand it, it’s a bad sign, as is an investment that seems too good to be true.
    Micah Hauptman, director of investor protection at the Consumer Federation of America, suggests asking a broker or advisor to verify in writing what they’re recommending and why they didn’t recommend a simpler, less costly option.
    “If they can’t give a simple, specific, clear, concise answer to ‘Why this as opposed to anything else on market, based on product cost and quality,’ then that could raise some red flags,” Hauptman said.

    Look for a fiduciary, fee-only advisor

    MoMo Productions

    Brokers generally remain a lower-cost option relative to advisors for consumers who trade stocks and mutual funds infrequently and hold them for a long time.
    Consumers who want ongoing, holistic advice and to reduce exposure to conflicts of interest as much as possible should seek out a fee-only financial advisor, according to consumer advocates.
    They can search for such advisors in networks such as the National Association of Personal Financial Advisors, Garrett Planning Network, XY Planning Network and Alliance of Comprehensive Planners.
    Such advisors must have a baseline competency such as the certified financial planner, or CFP, designation for financial planners and only receive flat fees for their hourly service, monthly subscriptions or fees based on the assets they manage for clients, Ron Rhoades, a CFP himself and director of the personal financial planning program at Western Kentucky University, told CNBC.
    “This is the easiest way for a consumer to find somebody who is definitely on their side,” Rhoades said.
    Consumers should interview at least three different advisors after conducting a search to ensure the right fit, he said.

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    GM is raising the price of its electric Hummer starting this weekend

    GM is increasing the price of its electric Hummer by $6,250, effective Saturday.
    The announcement comes after several automakers hiked the cost of their electric vehicles in recent weeks.
    Reservations for GM’s EV Hummer have topped 77,500, according to GM, a number that has exceeded the company’s initial expectations.

    GMC Hummer EV Edition 1
    Michael Wayland | CNBC

    GM said Friday that it is increasing the price of its electric Hummer by $6,250, effective Saturday.
    The company blamed higher prices for parts, technology and logistics.

    All reservations placed before Saturday are exempt from the increase, the company said. The Hummer EV pickup truck currently goes for about $80,000 to $100,000.
    The announcement comes after several automakers hiked the cost of their electric vehicles in recent weeks. The war in Ukraine and ongoing supply chain challenges have jacked up the the prices of the raw materials necessary for EV batteries, causing Tesla, Rivian and Cadillac to raise the prices of their electric vehicles.
    Reservations for GM’s EV Hummer have topped 77,500, according to GM, a number that has exceeded the company’s initial expectations.
    GM said in March that it would ramp up production of the Hummer EV.
    The Hummer EV pickup truck is for sale, but new orders are unlikely to be fulfilled until 2024 due to the number of current reservations, a company executive previously told CNBC. The Hummer EV SUV, which GM unveiled last year, isn’t expected to arrive until next year.
    — CNBC’s Michael Wayland contributed to this article.

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    Amid high inflation, 36% of employees earning $100,000 or more say they are living paycheck to paycheck

    Thirty-six percent of U.S. employees with salaries of $100,000 or more are living paycheck to paycheck, double the share in 2019, according to Willis Towers Watson.
    The highest earners are the only income group that reported an increase over that time.

    South_agency | E+ | Getty Images

    More than a third of high-earning American workers feel strapped for cash — a share that has risen dramatically in recent years.
    Thirty-six percent of U.S. employees with salaries of $100,000 or more are living paycheck to paycheck — twice as many who said they were in 2019, according to a survey conducted by Willis Towers Watson, a consulting firm.

    That’s more than the 34% of workers who earn $50,000 to $100,000 a year who are living paycheck to paycheck, though lower than the 52% of paycheck-to-paycheck workers with incomes of less than $50,000, according to the survey.
    However, the high earners are the only group that saw an increase in their paycheck-to-paycheck ranks in the last three years.
    More from Personal Finance:How young adults can start building creditInflation forces tough spending choices on some older AmericansCost to finance a new car hits a record $656 per month
    “Employees at higher pay levels aren’t immune to living paycheck to paycheck,” said Mark Smrecek, the financial wellbeing market leader for North America at Willis Towers Watson.
    Willis Towers Watson polled 9,658 full-time employees from large and midsize private employers in December and January 2022, before the most recent inflation readings.

    The findings are similar to a recent LendingClub survey that found 36% of people earning at least $250,000 a year live paycheck to paycheck.

    Inflation may push more to live paycheck to paycheck

    Quickly rising costs for food, transportation and other areas of household budgets may put further stress on families’ ability to save money, Smrecek said.
    The Consumer Price Index was up 8.6% in May from a year earlier, the highest inflation reading in about 40 years. The Federal Reserve raised its benchmark interest rate by 0.75 percentage points on Wednesday — the largest increase since 1994 — as part of an ongoing effort to rein in consumer costs.
    “These numbers are likely to increase if we see these inflation results continue,” Smrecek said of people living paycheck to paycheck.

    Housing expenses, debt present budget challenges

    The drivers of financial stress differ depending on income. The highest earners cited housing expenses as the most acute challenge, whereas low earners were more likely to report difficulties with debt, for example, Smrecek said.
    While the survey doesn’t break down specific housing expenses, employers have anecdotally pointed to increased costs for rents and mortgages as workers relocated residences during the pandemic, Smrecek added. Higher-income employees are more likely than lower earners to have jobs that allow them to work remotely.
    Some financial planners recommend Americans who are strapped for cash try adopting a 50-20-30 rule to bring their spending into line. This involves allocating 50% of after-tax income to essential expenses, 30% to discretionary expenses, and the remaining 20% to savings, investment and debt reduction.

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    Casino stocks are taking a hit as consumers struggle with inflation and recession fears

    Casino stocks have underperformed the S&P 500 as consumers grapple with inflation and recession concerns.
    Derek Stevens, who owns three Las Vegas properties, said his customers are scaling back spending on amenities and are gambling less at the tables and slots.
    “Every weekend has been worse than the prior weekend,” he told CNBC.

    Shares of casino companies have plummeted even as inflation has soared at rates not seen in four decades and fears of a recession rattle consumers and investors alike.
    Caesars Entertainment stock has plummeted 50% so far this quarter. Bally’s has dropped 40% over the same time period, and Penn National Gaming and MGM Resorts shares have declined 35%. To compare, the S&P 500, which recently entered a bear market, is down nearly 19% this quarter.

    Yet, the nation’s commercial casinos just had their best April ever, according to the American Gaming Association. The industry posted $4.99 billion in revenue, up 12.4% year over year. It’s the second-highest grossing month ever, following March of this year.
    On earnings calls in April and May, casino executives collectively denied seeing any slowdown in customer spending, in spite of soaring gas, housing and food costs, except in the very lowest demographic of customer.
    In a note published this week, Jefferies gaming analyst David Katz wrote that meetings with management teams in Las Vegas provided “evidence of the dichotomy between the current operating strength and the markets’ expectation of a recession.”

    Danny Owens of Sacramento, Calif. plays a slot machine in downtown Las Vegas, Nevada, June 4, 2020.
    Steve Marcus | Reuters

    Katz wrote that MGM, Caesars, Wynn Resorts, Boyd Gaming, Golden Entertainment, and Red Rock Resorts, which owns Stations casinos, say business levels continue to be “very strong” in the second and third quarter, with demand pricing and volume levels above 2019 and strong bookings into 2023, as conference business and international travel rebound in Las Vegas.
    But Derek Stevens, owner of three downtown Las Vegas properties, including Circa, is telling a different story. In April, he told CNBC he was beginning to see the impact from inflation based on the amount of cash being withdrawn from casino ATMs.

    There has been no letup since then, he told CNBC this week.
    “It’s just really accelerated,” Stevens said. “Every weekend has been worse than the prior weekend.”
    He described it as a downward spiral: Bars have suffered the biggest percentage decline, and gaming has seen the biggest impact as slots and table games have experienced a slowdown.
    And yet, Stevens said, demand for travel is still there: Reservations at his Las Vegas hotels are holding steady, without any room discounts. Hotel guests are limiting their spending elsewhere, he added, noting that customers are spending less on restaurants and extra amenities at the pool and other discretionary items.
    “If you’re on the West Coast, you might have felt it a little bit quicker because gas prices,” Stevens said, referring to California’s super-high fuel costs. “You can immediately see it in discretionary consumer spending.”

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    China's Xi says trade with Russia expected to hit new records in the coming months

    “Today our cooperation between Russia and China are rising,” Chinese President Xi Jinping said, according to an official English translation carried by Russian state broadcaster RT.
    “Trade over the first half of this year has been [in the tens of billions of U.S. dollars] and we can expect new records in upcoming months, which is a testament to the great cooperation between our two nations,” Xi said.
    The Chinese leader was speaking via video at the St. Petersburg International Economic Forum’s plenary session, which Russian President Vladimir Putin opened with a speech over an hour long.

    Chinese President Xi Jinping spoke Friday via video at the St. Petersburg International Economic Forum’s plenary session, which Russian President Vladimir Putin opened with a speech over an hour long. This picture is from Putin’s visit to Beijing in early February 2022.
    Alexei Druzhinin | AFP | Getty Images

    BEIJING — Chinese President Xi Jinping on Friday emphasized his country’s commitment to trading with Russia, despite Western sanctions against Moscow over its invasion of Ukraine.
    “Today our cooperation between Russia and China [is] rising,” Xi said, according to an official English translation carried by Russian state broadcaster RT. He cited Russian President Vladimir Putin’s visit to Beijing in early February.

    “Trade over the first half of this year has been [in the tens of billions of U.S. dollars] and we can expect new records in upcoming months, which is a testament to the great cooperation between our two nations,” Xi said.
    The Chinese leader was speaking via video at the St. Petersburg International Economic Forum’s plenary session, which Putin opened with a speech over an hour long.
    The official Chinese state media readout of Xi’s remarks did not mention “new records” in trade between China and Russia. The readout did call for the removal of trade barriers and greater cooperation with other countries, including Russia.
    In both the Chinese readout and RT’s translation, Xi emphasized how China’s economic potential has not changed and talked about the further development of the Belt and Road Initiative.

    Trade between China and Russia totaled $65.81 billion in the first five months of this year, up 28.9% from a year ago, according to China customs data. Most of the growth came from Chinese imports from Russia.

    Beijing has refused to call Russia’s attack on Ukraine an invasion. After a high-profile meeting between Xi and Putin in early February, a readout said there were “no limits” or “forbidden areas” of cooperation, without mentioning Ukraine.
    Earlier this week, Xi said in a phone call with Putin that Kyiv and Moscow “should push for a proper settlement” in the ongoing war in Ukraine, according to a Chinese readout of the call.
    “China, they have their national interest in mind,” Putin said Friday following Xi’s remarks, according to RT’s English translation. “But we do not contradict each other.”
    He described Russia’s relations with China as “friendly,” but noted that “it doesn’t mean China should play along with us in everything. We don’t need that.”
    Xi has not spoken with Ukrainian President Volodymyr Zelenskyy since Russia invaded Ukraine in late February. From Germany to Japan, many countries have joined the U.S. in freezing the assets of Russian oligarchs, restricting access of Russia’s biggest banks to the global financial system, and cutting off Russia from critical technology.

    Diverging ‘Davos’ events

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    WWE boss Vince McMahon to step back from CEO duties during misconduct probe

    WWE Chairman and CEO Vince McMahon is stepping back from his duties as the company’s board investigates alleged misconduct by the executive.
    The announcement comes after The Wall Street Journal revealed the WWE board was probing a $3 million hush payment from McMahon to a female former employee over an alleged affair.
    Stephanie McMahon, McMahon’s daughter, will take over as interim chairman and CEO.

    WWE Chairman and CEO Vince McMahon speaks at a news conference announcing the WWE Network at the 2014 International CES in Las Vegas.
    Getty Images

    WWE Chairman and CEO Vince McMahon is stepping back from his duties as the company’s board investigates alleged misconduct by the executive, the company announced Friday.
    The announcement of the move and the special board committee probe comes two days after The Wall Street Journal reported that the WWE board was looking into McMahon for paying a former employee $3 million to keep her quiet about an alleged affair between the two of them.

    The report said the probe also dug up previous nondisclosure agreements with former female WWE employees who alleged misconduct against McMahon and another executive, John Laurinaitis, who used to wrestle under the name Johnny Ace. The board’s investigation began in April, the Journal had reported.
    “I have pledged my complete cooperation to the investigation by the Special Committee, and I will do everything possible to support the investigation,” McMahon said in a press release Friday. “I have also pledged to accept the findings and outcome of the investigation, whatever they are.”
    McMahon will remain involved in the wrestling media company’s creative content, according to the release.
    McMahon’s daughter, Stephanie McMahon, will take over as interim chairwoman and CEO. Stephanie McMahon said in May that she was pulling back from the bulk of her duties as a WWE executive to spend more time with her family.
    “I love this company and am committed to working with the Independent Directors to strengthen our culture and our Company; it is extremely important to me that we have a safe and collaborative workplace,” Stephanie McMahon said in the release. “I have committed to doing everything in my power to help the Special Committee complete its work, including marshaling the cooperation of the entire company to assist in the completion of the investigation and to implement its findings.”

    The announcement didn’t mention whether Laurinaitis, the company’s head of talent relations, would also step away from his duties while the investigation unfolds. The WWE didn’t immediately respond to a request for further comment. In its release, the WWE said, “The Company and the Board do not expect to have further comment until the investigation is concluded.”
    Vince McMahon, 76, is married to Linda McMahon, a former CEO of the wrestling company who worked as the head of the Small Business Administration under then-President Donald Trump, a WWE Hall of Famer.
    While the WWE is a publicly traded company, McMahon, a flamboyant executive who has routinely acted out wrestling drama storylines in front of the camera, is effectively the controlling shareholder. He bought the company from his father 40 years ago and has orchestrated its growth into a global, arena-packing brand that has media partnerships with Fox, Hulu and NBCUniversal’s Peacock, among others.
    Disclosure: NBCUniversal is the parent company of CNBC.

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    Black personal finance influencers are making financial freedom a focus this Juneteenth

    Social influencers focused on financial education for the Black community are emphasizing a message of financial freedom this Juneteenth.
    “I definitely feel the Juneteenth remembrance should have a level of economic understanding as a part of it,” Rashad Bilal of the Earn Your Leisure podcast.
    Bilal and others are working to help Black Americans contend with a wide wealth disparity with white Americans.

    Troy Millings, left, and Rashad Bilal of Earn Your Leisure
    Source: Earn Your Leisure

    Social influencers focused on financial education for the Black community are emphasizing a message of financial freedom this Juneteenth as the nation commemorates the end of slavery in the United States.
    “I definitely feel the Juneteenth remembrance should have a level of economic understanding as a part of it,” Rashad Bilal of the Earn Your Leisure podcast told CNBC. “But I think the problem with holidays is that no matter what it is Christmas, Easter, New Year’s, everything is just made as a celebration, and you lose the meaning of it.”

    Bilal, a former financial advisor, added: “The importance of freedom both economically and social on Juneteenth is something that people should keep in mind every single day.”
    Earn Your Leisure, which is focused on financial literacy, has more than 1 million followers on Instagram and is part of a growing movement of content creators providing insight and tips on the markets, real estate,  crypto currency, entrepreneurship and more.

    “Let’s see where it goes. Maybe it’s not just this holiday or a week or Black History Month. What if we can have this economic conversation on a daily basis?” said Earn Your Leisure’s Troy Millings, a former physical education teacher.
    They’re also making an explicit link between goals of financial freedom today and the economic impact slavery had on America and its Black citizens.
    “Understand that  people literally died for finances. That’s what slavery was really about. It was a financial system that was put in place for free labor,” Bilal said. “So when you see our ancestors actually sacrificed their lives and that was done for economic empowerment, it forces you to look at your finances. You don’t want to just waste your money. You can actually use that money to change the trajectory of your family.”

    Black Americans are at a disadvantage when it comes to wealth. According to a Federal Reserve study released in 2020, the median net worth of Black families in the United States was about $24,000. The approximate median net worth for white families was $188,000.

    Ian Dunlap aka Master Investor, center, with Troy Millings and Rashad Bilal.
    Source: Ian Dunlap

    Other influencers spreading the economic emancipation message this Juneteenth include Ian Dunlap aka The Master Investor, Kezia Williams, the Wall Street Trapper, Philip Michael and Ross Mac. They have millions of social media followers, and each has their own niche but the same goal of helping the Black community balance their books and build wealth.
    Dunlap told CNBC that he thinks economic freedom is just as important as social justice. “If we have don’t have economic freedom and financial literacy we truly do not have justice,” he said.
    Dunlap is urging Black Americans to pay special attention to a 2017 report that forecasts the median wealth of Black households will fall to $0 by 2053 and look for opportunities to invest. “I don’t want our people, our kids, our grandchildren to become destitute and that’s the challenge we face if we don’t collectively take action,” he said.

    Kezia Williams
    Kezia Williams | Black upStart

    Elsewhere, Williams calls herself an “emancipation activist” as well as an influencer. Williams is the CEO of Black upStart, a company that provides education and support to early stage entrepreneurs.
    In previous years, Williams has urged Black consumers to view Juneteenth as an opportunity to support Black businesses and post their receipts with the hashtag #myBlackReceipt.
    “Invest in those Black entrepreneurs who will use those dollars that you spend with their business in order to give back to their communities and create products and services that our community needs and also build wealth for their family that can yield generational returns.” Williams said.
    Michael, meanwhile, has a goal of helping 100,000 Black people become millionaires by 2030 through real estate. He boasts a $250 million dollar real estate portfolio created from $850,000 in seed money from a relative.
    “The asset class that has created more millionaires than any other is real estate. That’s one of the ‘easiest’ ways to get that point,” Michael told CNBC. “Really, what I want to do is normalize those conversations in a casual format where we can talk about our investment portfolio just as easy as we talk about a trip we went on or shoes we bought.”

    Philip Michael
    Source: Philip Michael

    The Earn Your Leisure podcast is considered a pioneer is the emerging space of financial influencers and has scored many high profile people in the world of business, sports and entertainment to discuss their financial plans, mistakes and goals. Those guests have included Mark Cuban, Shaquille O’Neal and Steve Harvey.
    The hosting pair also created the hashtag #AssetsOverLiabilities that has become the philosophy of their content and a motto used on t-shirts and other merchandise. Bilal and Millings, started their podcast in January of 2019 with the goal of demystifying Wall Street for the Black Community.
    “We wanted to make learning about finance and generational wealth a cool thing, we wanted to make it a commonplace conversation. I didn’t grow up with conversations like that at the dinner table. But imagine if we did? Imagine if at the barbershop we weren’t arguing about the best basketball player, but we were talking about the top companies, what that could do to a neighborhood.” Millings said.
    Bilal and Millings now believe Earn Your Leisure has evolved from creating content to truly educating the Black community about wealth creation.
    “Educating is something that is sustainable over the long term. In the formal setting the way you understand somebody’s learning is you assess.” Millings said. “Our assessment is when we hear the feedback when we go out, and we see the people and they tell us about the stories or when they send us emails and saying, ‘this changed my life.'” More

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    FBI says fraud on LinkedIn a 'significant threat' to platform and consumers

    The FBI says investment fraudsters pose a “significant threat” to LinkedIn.
    Users around the country tell CNBC they lost small fortunes after connecting with someone on LinkedIn who they believed was giving them sound financial advice.
    The company acknowledges a recent increase in fraud and says it removed 32 million fake accounts last year.

    SAN FRANCISCO — Fraudsters who exploit LinkedIn to lure users into cryptocurrency investment schemes pose a “significant threat” to the platform and consumers, according to Sean Ragan, the FBI’s special agent in charge of the San Francisco and Sacramento, California, field offices.
    “It’s a significant threat,” Ragan said in an exclusive interview. “This type of fraudulent activity is significant, and there are many potential victims, and there are many past and current victims.”

    Sean Ragan, FBI special agent in charge of the San Francisco and Sacramento field offices.
    Source: CNBC

    The scheme works like this: A fraudster posing as a professional creates a fake profile and reaches out to a LinkedIn user. The scammer starts with small talk over LinkedIn messaging, and eventually offers to help the victim make money through a crypto investment. Victims interviewed by CNBC say since LinkedIn is a trusted platform for business networking, they tend to believe the investments are legitimate.
    Typically, the fraudster directs the user to a legitimate investment platform for crypto, but after gaining their trust over several months, tells them to move the investment to a site controlled by the fraudster. The funds are then drained from the account.
    “So the criminals, that’s how they make money, that’s what they focus their time and attention on,” Ragan said. “And they are always thinking about different ways to victimize people, victimize companies. And they spend their time doing their homework, defining their goals and their strategies, and their tools and tactics that they use.”
    Ragan said the FBI has seen an increase in this particular investment fraud, which is different from a long-running scam in which the criminal pretends to show a romantic interest in the subject to persuade them to part with their money. The FBI confirmed it has active investigations but could not comment since they are open cases.
    In a statement, LinkedIn acknowledged there has been a recent uptick of fraud on its platform, telling CNBC that “we enforce our policies, which are very clear: fraudulent activity, including financial scams, are not allowed on LinkedIn. We work every day to keep our members safe, and this includes investing in automated and manual defenses to detect and address fake accounts, false information, and suspected fraud.”

    “We work with peer companies and government agencies from across the world with the goal of keeping LinkedIn members safe from bad actors. If a member encounters or is the victim of a scam we ask that they report it to us and to local law enforcement.”
    LinkedIn’s senior director of trust, privacy and equity, Oscar Rodriguez, said, “trying to identify what is fake and what is not fake is incredibly difficult.”
    “One of the things that I would really love for us to do more is get into proactive education for members,” Rodriguez said. “Letting members know or basically allowing them to understand the risks that they might face.”
    The company says it removed more than 32 million fake accounts from its platform in 2021, according to its semiannual report on fraud. From July to December 2021, its automated defenses stopped 96% of all fake accounts — that includes 11.9 million that were stopped at registration and 4.4 million that were proactively restricted, the report said. Members reported 127,000 fake profiles that were also removed.
    LinkedIn said its automated defenses caught 99.1% of spam and scams, a total of 70.8 million, in that same time period. Another 179,000 were removed after members reported them. LinkedIn said it doesn’t provide estimates on how much money has been stolen from members through its platform.
    The company cautioned users in a Thursday night blog post on its platform against sending money to people they don’t know and responding to accounts with a questionable work history or other red flags, such as poor grammar.
    That’s little comfort to Mei Mei Soe, a Florida benefits manager who says she lost $288,000 — her entire life savings — to a scammer on LinkedIn. It started out innocently enough with someone whose profile said he was a manager at a Los Angeles fitness company seeking to connect with her last December. They began chatting first over LinkedIn and then on a messaging app, and she said she was intrigued by his offer to help her make money.

    Mei Mei Soe, fraud victim.
    Source: CNBC

    “He asked me if I’m on LinkedIn for professional networking or if I’m looking for a job,” Soe said. “I never trust anybody, but we began talking and over time he gained my trust.”
    Soe said when the conversation eventually turned to investing, “he showed me how he’s profiting from his investments and told me I should start investing with crypto.com which I know is a legitimate website. I started with $400.”
    The fraudster convinced her to move her investments to a site he controlled. Over several months, Soe would make a total of nine transactions, which included bank loans and money borrowed from friends, hoping to use her earnings to start a small business. But Soe would soon learn that the connection she made on LinkedIn wasn’t who he said he was. In the end, she lost all of her funds.
    “I still remember the day,” Soe said. “Once I realized I had been scammed, I tried to contact him but couldn’t find him anywhere. I work hard, and every single dollar I save, I work hard to save that. It hurts.”
    She said she never thought she would get scammed on LinkedIn.
    Crypto.com said it immediately takes down accounts that it finds are linked to a scam.
    “We take a proactive approach to managing and protecting against external threats, including scam and phishing campaigns,” it said in a statement to CNBC. “As with all financial transactions, fiat or crypto, it is critical to ensure the account receiving funds is legitimate and its owner is identified and trustworthy prior to the transfer.”
    Soe’s story is not unique. A group of victims defrauded on LinkedIn which meets regularly over Zoom recently invited a CNBC reporter to join the session, as long as the participants’ faces were concealed and their names not revealed. Their losses ranged from $200,000 to $1.6 million.
    “We just never thought there could be such malicious intent behind a LinkedIn profile,” one victim who lost $350,000 said.
    “The fraudsters hide behind successful companies,” another victim who lost $200,000 said. “One of the biggest reasons I accepted the invite was the person stated on their profile that they worked for a legitimate company.”
    “We’ve lost a lot of money,” a victim who lost $700,000 said. “And it’s not just all of our savings, people have lost their houses and their car loans. It’s life destroying and soul crushing.”
    Ragan said he understands the victims’ pain, but they should not blame themselves.
    “It’s not their fault that they were victimized,” Ragan said. “It’s the perpetrator’s fault. It’s the criminal’s fault. They spend their nights and days thinking about ways to victimize and defraud people. That’s how they make their money through illicit gains. And the people that fall victim to it, they’re victims.”
    The Global Anti-Scam Organization, a victim advocacy and support group, has traced the majority of the perpetrators to Southeast Asia.
    “They usually target victims on LinkedIn by showing that they have some entrepreneurial spirit,” Grace Yuen, Global Anti-Scam Organization spokesperson, said. “They may claim they graduated from a well-known university, then they say they’re in finance or in investment. Sometimes they even pretend to be in the same industry as you.”

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