If history is a guide, dramatic news coverage of viral outbreaks, including Ebola and Middle East Respiratory Syndrome (MERS), will likely catch the interest of stock scammers looking to capitalize on fears of a potential pandemic.
A recent Financial Industry Regulatory Authority (FINRA) alert warns investors not to fall for the hype. Be wary of promotions touting stocks that claim to protect against the spread of viruses or other harmful diseases. The organization is aware of several potential investment scams involving companies that claim to be involved in the development of products that will prevent the spread of viral diseases. They offer the following tips to avoid becoming a victim:
Consider the source. Be skeptical of press releases, emails and promotional materials from unknown senders hyping a company and its products.
Do some sleuthing. Some basic research on the company can quickly reveal red flags. Non-working phone numbers, bogus business addresses and news reports often can be revealed through a simple internet search.
Know where the stock trades. Companies that list their stocks on exchanges must meet minimum listing standards. Most schemes and scams involve stocks that do not trade on NASDAQ, the New York Stock Exchange or other registered national securities exchanges. Instead, they tend to be quoted on an over-the-counter (OTC) quotation platform.
Before considering any new investments, call your financial advisor for assistance and insights.
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