Patrick McHenryChairman

Today, the Republican leader of the House Financial Services Committee, Patrick McHenry (NC-10), sent a letter to Chairwoman Maxine Waters (CA-43) urging her to convene a hearing to explore predominant types of fraud and financial exploitation used by bad actors, as well as strategies to prevent them.  The hearing request follows Committee Republicans’ release of a Republican Staff Report, which found an increase in cyberattacks targeting Americans working remotely, and a proliferation in pandemic-themed scams.

 

Republican Leader McHenry writes: “This Committee should do our part to stand up for everyday investors by more closely examining the various ways in which fraudsters, scammers, and hackers prey on American investors. I respectfully request that you schedule a hearing, or hold a series of hearings, on these important issues as soon as possible, and I look forward to working with you throughout the 117th Congress to protect Americans attempting to build wealth and save for the future.”

 

 

Dear Chairwoman Waters: 

 

In recent years, the rate of participation by retail investors in the American capital markets has continuously increased. In fact, retail investors accounted for 25 percent of all trades on the busiest trading days of 2020. As our economy continues to recover and as the major U.S. indexes build on their robust 2020 performances, it is clear that everyday Americans recognize our capital markets as a vehicle for helping them achieve the American Dream. 

 

Yet, with the increase in retail investment participation has come an increase in the number of bad actors, such as fraudsters, hackers, and other predators, who are exploiting this increased activity for their benefit. To ensure that our capital markets are secure and everyday investors are protected, the Committee should prioritize a hearing exploring the predominant types of fraud and financial exploitation used by bad actors, and strategies to prevent them. 

 

Experts have recently noted an increasing number of Ponzi schemes, with over 600 such schemes uncovered in the last decade and three to ten new schemes reported each month. The latest schemes target those who believe they missed out on the substantial stock market gains over the last few years and are eager to catch up. 

 

Criminals are financially exploiting older adults through scams and cyber-attacks: roughly five million older Americans are victims of financial scams every year, losing an estimated $36.5 billion annually. Likewise, the retirement industry has seen an increase in cyber theft of personal information and savings in recent years. In response to data breaches across several industries, the Government Accountability Office recently issued a report recommending that “industry and government prevention and mitigation efforts evolve to keep pace with these threats” and noting that a single cyber-attack could result in “enormous losses of both personally identifiable information and plan assets.”

 

GAO’s findings are consistent with a report issued by Republican staff in January 2021, which described how cybercriminals and malicious actors adapted their tactics to leverage the COVID-19 pandemic to attack systems at government agencies and financial institutions. The report found increased cyberattacks targeting Americans working remotely, and a proliferation in pandemic-themed scams. 

 

This Committee should do our part to stand up for everyday investors by more closely examining the various ways in which fraudsters, scammers, and hackers prey on American investors. I respectfully request that you schedule a hearing, or hold a series of hearings, on these important issues as soon as possible, and I look forward to working with you throughout the 117th Congress to protect Americans attempting to build wealth and save for the future.

 

Sincerely,

 

Patrick McHenry

 

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