Common forms of fake pre-IPO investments
| Scheme | How it works | Tell-tale sign |
|---|---|---|
| Phantom shares | Seller claims to hold shares, or a fund claims to own them, but no shares were ever acquired | No company-approved transfer documents; vague answers about how shares are held |
| Clone brokerage sites | A website copies a real broker-dealer's name, logo, and CRD number | Phone number, email domain, or web address doesn't match BrokerCheck's listing |
| Company impersonation | Scammers claim to represent the private company's "employee share program" or a "pre-IPO allocation" | The company has no such program; contact goes through personal email or messaging apps |
| Pre-IPO "tokens" | Crypto tokens marketed as exposure to a private company | Companies have publicly said such tokens are not their equity; you own a token, not shares |
| Fake trading apps | An app shows growing balances in pre-IPO "positions" | You can't withdraw without paying "taxes" or "release fees" |
| Forged certificates | Paper or PDF stock certificates sent as "proof" | Private companies typically issue shares electronically through a transfer agent or cap-table platform |
How to identify a fake pre-IPO investment platform
- Look up the firm on BrokerCheck and call the number listed there, not the one on the website.
- Check the SEC's PAUSE list, which names entities using false or misleading registration claims and impersonators.
- Check the domain's registration date; a site registered weeks ago claiming years of history is a red flag.
- Be wary of payment by cryptocurrency, gift card, or wire to an individual.
- Test a small withdrawal before investing more; fake platforms often block withdrawals.
How to report a fake pre-IPO stock offering
- Submit a tip to the SEC.
- Report to the FBI's Internet Crime Complaint Center if the contact or payment was online or involved crypto.
- File with your state securities regulator.
- If a real brokerage firm or private company was impersonated, notify its compliance or legal department.
- Contact your bank immediately about any recent wire; recalls are sometimes possible within hours or days.
Beware of recovery scams
Victims of fake offerings are often contacted by "recovery agents" who promise to get the money back for an upfront fee. Regulators don't charge fees to return money, and legitimate attorneys put fee terms in writing.