As AI Fraud Explodes, Finra Warns Advisor Accounts Are Big Targets

Financial fraud is becoming faster, cheaper and frighteningly convincing. Now criminals are increasingly targeting financial advisors and their clients to help carry it out.

“If there’s something out there that your competitors have seen, it’s coming to you next,” Thor Nelson, who leads global financial crimes at Ameriprise Financial, warned financial firms at Finra’s 2026 Financial Crimes and Cybersecurity Conference.

The numbers explain the urgency. Reported investment fraud losses reached nearly $8.6 billion last year, including about $7.2 billion tied to cryptocurrency scams, conference attendees were told. An industry estimate cited by Finra puts potential losses from AI-enabled fraud at roughly $40 billion by 2027.

The schemes are also changing, regulators and experts warned. Criminals who once hacked brokerage accounts to liquidate investments and steal the proceeds are increasingly coordinating account takeovers to buy low-priced securities, drive up their prices and sell their own holdings at a profit.

Now they are targeting financial advisor accounts, potentially giving criminals access to far greater firepower to manipulate stocks. “The scale and the amount of money available to them to potentially pump up a stock has grown exponentially,” Wyatt Hamilton of Finra’s Cyber and Analytics Unit said. “That’s quite worrisome.”

Finra is also seeing manipulators shift tactics as firms catch on. Investment-club scams surged in 2024 and 2025, generating hundreds and potentially thousands of complaints, said Finra’s Mayur Patel, senior principal intelligence specialist. As firms responded, criminals increasingly pivoted toward account takeovers to manipulate securities. “What’s newish in the past couple of years is using that not to just liquidate the assets and steal the money, but to use it to pump the stock,” Patel said.

In one case handled by the FBI’s Chicago office, several hundred U.S. investors were lured through social media into what appeared to be a polished, legitimate investment club and encouraged to buy shares of China Liberal Education Holdings. Authorities received about 50 complaints within 24 hours after the stock collapsed and ultimately seized nearly $300 million tied to the scheme. Bad actors are also migrating from easily flagged over-the-counter penny stocks to thinly-traded Nasdaq-listed microcaps, where firms may not have comparable controls.

The artificial intelligence boom is making nearly every part of the fraud machine more potent. Scammers can easily manufacture fake checks, passports, driver’s licenses, corporate documents, investment recommendations, and social media identities in seconds. Nelson said some AI-generated documents are now so convincing that fraud departments struggle to identify them. “Any type of documents that you’ve used that you’ve relied on aren’t the same anymore because AI can generate them, and with a high degree of accuracy,” he said.

Finra says some firms have even stopped relying on voice confirmation alone because AI impersonation has made it insufficient for verifying customers.

The threat extends to advisors themselves. Finra is finding fraudulent websites impersonating registered representatives and brokerage firms, often using information scraped from BrokerCheck. High-profile advisors with large social media followings or television exposure are particularly attractive targets.

The defenses regulators and firms recommend are decidedly practical: stronger authentication, risk-based identity verification, simulations, better employee training and constant communication among fraud, cybersecurity, anti-money laundering, compliance and legal teams.

Charles Schwab’s DJ Johnson, managing director of financial crimes risk management, said financial firms must move information at the same speed criminals do. “In the fraud space, it’s got to be at the speed of fraud,” Johnson said. “It’s got to be immediate. It’s got to be quick.”

Schwab has consolidated anti-money laundering, sanctions, fraud and conduct functions under one financial-crimes risk management structure, which Johnson said reduces silos and speeds information sharing. That collaboration can produce dramatic results. Johnson described one “ramp-and-dump” investigation involving a thinly traded foreign security promoted through social media. Cooperation among federal authorities, financial institutions and Finra resulted in seven federal indictments and the seizure of roughly $200 million that was earmarked for victims.

“It was a fascinating example of what can actually happen when organizations are working together with a single goal or mindset,” Johnson said.

For firms, Nelson said waiting until money disappears is too late. Probe systems as criminals would. Study near misses. Share intelligence. And assume yesterday’s defenses may not stop tomorrow’s attack.

“Learn from the ones where you’re lucky,” Nelson said. “Because the next time you’re not going to be lucky.”