Investment scams that urge people to buy unlisted shares on the claim that an initial public offering (IPO) is imminent remain widespread. In response, the Financial Supervisory Service said it will raise its consumer alert on IPO investment scams that use "imminent listing" as bait by one level from "caution" to "warning."
According to the Financial Supervisory Service (FSS), consumer complaints continue to be filed over investment scams that use exaggerated business claims and false listing information to solicit purchases of unlisted shares.
The crime ring's methods follow several patterns. Illegal outfits impersonating small domestic financial companies or YouTube investment experts start by touting free "soaring stock picks" via text messages or social media to invite investors into illegal lead-chat rooms.
They actually hand out 1 to 5 weeks' worth of shares that are set to list, for free, so investors can realize profits and be lured into putting in larger sums. They then raise funds for unlisted shares with phrases such as "listing is imminent," "multiple times profit expected upon listing," and "repurchase and principal guaranteed if listing fails."
However, the Financial Supervisory Service (FSS) warned, "If someone urges you to buy unlisted shares while claiming a listing is imminent, assume it is a scam." If a company is undergoing the listing process, related business information can be checked through the Korea Exchange (KRX) and the Financial Supervisory Service's electronic disclosure system. For unlisted companies, it is safer to verify business information such as financial status and investment risks yourself before investing.
The Financial Supervisory Service (FSS) also noted that institutions within the formal financial system do not solicit investments via one-on-one chat rooms, email, or text. It further urged that all information encountered online, including internet articles, can be falsified, and asked that suspected illegal financial investments be reported promptly to the Financial Supervisory Service (1332) or the Korean National Police Agency (112).