Beware of “illegal stock recommendations” and steer clear of investment scams.

Release date:

2024-03-19

What is “illegal stock recommendation”?

“Illegal stock recommendations” refer to activities in which unqualified institutions and individuals provide investors with paid advisory services—direct or indirect—that include securities investment analysis, forecasts, or recommendations. The key elements are “unqualified” and “paid.” “Unqualified” means lacking the requisite securities industry credentials, particularly an investment advisor license; “paid” means that these institutions and individuals charge a fee for recommending stocks.

What are the main methods used in “illegal stock recommendations”?

First, illicit actors use platforms such as WeChat, Weibo, forums, stock discussion boards, and QQ to lure members or clients with exaggerated promotional claims like “recommending dark horses,” “providing one-on-one expert guidance,” or “no fees unless there are returns.”
Second, after investors join WeChat groups, QQ groups, or online live‑streaming rooms, individuals posing as “teachers” or “experts” illegally recommend stocks under the guise of sharing stock‑trading experience and teaching trading techniques, charging exorbitant service fees under various pretexts.
Third, some criminals use “stock recommendations” as a pretext to engage in other illegal and criminal activities, directing investors to buy and sell stocks simultaneously in suspected market manipulation, or luring investors into spot trading or overseas futures trading for illicit profits.

How can you effectively identify “illegal stock recommendations” and stay away from unlawful harm?

To guard against “illegal stock recommendations,” the key is to tightly control both the “entry point” and the “exit point.” The “entry point” refers to the “source of information”: when investors receive unsolicited contact from strangers via phone, text message, QQ, WeChat, or other communication tools offering stock‑picking services, they must remain highly vigilant and avoid trusting such offers. The “exit point” refers to the “outflow of funds”: do not readily follow stock recommendations, especially those that also promote “membership services” or “consulting services.” Refrain from transferring money unless absolutely necessary, and protect your own finances.

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