CySEC and FCA Are "Aware" of Rife Investor Fraud on Social Media. Stopping It Is Harder.

<p>Scammers are rampant on social media, cloning the identity of almost all known financial services brands. In the first part of this series, Finance Magnates identified dozens of such scammers operating on Telegram. These scammers approach traders with trading signals and then try to sell “premium services” to them. Some even sell managed trading services using bots with insane returns. These scammers are seeking payments in cryptocurrencies.
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As mentioned <a href="https://www.financemagnates.com/forex/clone-scams-are-killing-it-on-social-media/" target="_blank" rel="follow">in the first part published last week</a>, tackling such scammers is very difficult. Even if some companies successfully report and take down one clone, multiple other clones will reappear. Also, <a href="https://www.financemagnates.com/tag/telegram/">Telegram</a>, a major social media application brewing these clones, does not appear to have any specific policy against clones and scams. Now, companies are mass reporting about such clones using the usual report technique of the social media app.</p><p>The Role of Regulators</p><p>Regulators are the ultimate authority to prevent investment fraud. Many financial market regulators are <a href="https://www.financemagnates.com/forex/consobs-fight-against-financial-fraud-4-websites-blocked-in-latest-offensive/">actively flagging and blacklisting illegal brokers</a>, including clones and fraudsters. However, these have turned out to be ineffective in tackling the clones on social media.
</p><p>The FCA takes action where it finds 'credible evidence' of a breach of its rules. It issues alerts where it has concerns to raise awareness amongst consumers and asks for content removal in the majority of cases. However, the UK authority has no power to force this specific organisation to remove the contents.</p><p>The British regulatory body is endeavouring to ascertain whether an individual qualifies as an advisor, a determination contingent upon factors such as the type of service rendered, the recipient of the service, and the subject matter of the advice dispensed. In other words, this determination hinges on the specifics of each individual case.</p><p>The powers vary from regulator to regulator. While most of the regulators can only issue a public warning, only <a href="https://www.financemagnates.com/forex/consobs-fight-against-financial-fraud-4-websites-blocked-in-latest-offensive/">Italy's Consob </a>can block the domains of illegal and fraudulent platforms at an internet service provider level. However, Consob too does not publicly take any action against scammers on social media.</p><p>The <a href="https://www.financemagnates.com/forex/regulation/exclusive-cysecs-chair-regulators-should-be-careful-with-ai/">Cyprus Securities and Exchange Commission </a>(CySEC), which regulates dozens of FX/CFDs brokers, has confirmed that it is not directly taking any action against financial services scammers on Telegram and other social media.</p><p>"CySEC takes its responsibility to protect investors extremely seriously. Although we have not yet taken direct action against Telegram, we recognize that fake or scam brokerage platforms and clones of regulated entities put investors at risk and we are taking action in other ways to protect investors," a CySEC representative told Finance Magnates.</p><p> "We do this by using sophisticated social media monitoring tools that identify aggressive marketing tactics in real-time, and capture suspicious activity. When our investigations lead us to blacklist a fake website, we report the case to the police electronic crime unit," said the watchdog representative</p><blockquote><p lang="en" dir="ltr">