Clone scams are on the rise, the Securities Commission Malaysia (SC) warned to the investing public this Friday, stating that there is an increasing amount of fraudsters trying to trick investors via clone firms.

In particular, the regulator warned that a number of capital market licensed entities had lodged reports with the Securities Commission of Malaysia, claiming that their corporate identities have been cloned by unknown persons or organizations.

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As the name suggests, clone firms are fraudulent entities that copy details of a legitimate firm, such as their name, website, address, registration details, etc. Some even go to the lengths of completely copying a firm – from their website, to brand, in order to trick investors into thinking that they are the actual legitimate firm.

As pointed out by the watchdog, anyone who engages in securities fraud or pretends to be a capital market intermediary or provides any regulated activities without a valid license or registration from the SC is committing an offense under the Capital Markets and Services Act 2007. If convicted, they may be punished with imprisonment of up to ten years and fined.

“The SC reminds investors to always exercise due caution when considering investment opportunities, especially those promising extremely high returns with little or no risks. Investors are also encouraged to verify the status of individuals or companies offering investing opportunities via the SC website,” the regulator said in its statement this Friday.

Fraudsters use COVID-19 to scam victims

Across the world, regulators have their work cut out for them dealing with financial scams, which have only become more prevalent during COVID-19. As Finance Magnates reported, the Investment Association (IA) warned that evidence suggested that some scammers are attempting to use the pandemic to convince savers and investors to withdraw money from their investments.

Investment management firms have seen a noted increase in this criminal activity, previously focused on retail banking customers, the IA said.