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SIPC warns of fake checks sent to consumers

Thursday, May 20, 2010

The Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund mandated by Congress to protect the customers of insolvent brokerage firms, warned today that consumers should not accept SIPC checks that are presented online or in person by con artists seeking to buy personal goods.

SIPC officials said the fake checks include an actual SIPC account number that is used only for deposits. No checks of any kind are issued on the account in question.

In over a half dozen cases so far, one or more individuals have presented the phony SIPC checks to “pay” for an item on Craigslist or in face-to-face transactions. In some cases, the bad check passer or passers are trying to purchase items for less than the face value of the phony check and then asking for the balance in return, or for the balance to be forwarded to a third party.

As far as SIPC is aware, the face amounts of the fraudulent checks are less than $5,000.  No SIPC funds have been stolen in this scheme.

SIPC President Stephen Harbeck said: “I want to be very clear that SIPC does not issue checks of this kind.  As such, the public should not accept SIPC checks from any person purporting to buy goods for their personal use.”

SIPC was alerted to the scheme by consumers who were suspicious of the checks and did not proceed.  However, at least one person has been victimized so far in the scheme. The matter has been referred by SIPC to the proper authorities for investigation.

All investor inquiries of SIPC should be directed to .(JavaScript must be enabled to view this email address) or (202) 371-8300.

The Securities Investor Protection Corporation is the U.S. investor’s first line of defense in the event a brokerage firm fails, owing customer cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds.

The statute that created SIPC provides that customers of a failed brokerage firm receive all non-negotiable securities - such as stocks or bonds - that are already registered in their names or in the process of being registered. At the same time, funds from the SIPC reserve are available to satisfy the remaining claims of each customer up to a maximum of $500,000. This figure includes a maximum of $100,000 on claims for cash. From the time Congress created it in 1970 through December 2009, SIPC has advanced $1.2 billion in order to make possible the recovery of $108 billion in assets for an estimated 763,000 investors.

Tags/Keywords

money, fraud, checks, scam, cash, sipc

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