|[August 20, 2013]
FINRA Warns Investors of Marijuana Stock Scams
WASHINGTON --(Business Wire)--
The Financial Industry Regulatory Authority (FINRA) issued a new
Investor Alert called Marijuana
Stock Scams to warn investors about potential related scams.
Medical marijuana is legal in almost 20 states, and recreational use of
the drug was recently legalized in two states. As a result, the cannabis
business has been getting a lot of attention - including the attention
of scammers. Like many investment scams, pitches for marijuana stocks
may arrive in a variety of ways - from faxes to email or text message
invitations, to webinars, infomercials, tweets or blog posts.
The con artists behind marijuana stock scams may try to entice investors
with optimistic and potentially false and misleading information that in
turn creates unwarranted demand for shares of small, thinly traded
companies that often have little or no history of financial success. The
scammers behind these "pump and dump" scams can then sell off their
shares, leaving investors with worthless stock.
"Investors considering investing in a heavily touted, thinly traded
company should question why a total stranger would tell them about a
really great investment opportunity. In reality, there is likely no true
opportunity. Investors should always find out whether the promoter is
licensed using FINRA BrokerCheck,
and check out the investment using the Securities and Exchange
database of company filings," said Gerri Walsh, FINRA's Senior Vice
President for Investor Education.
One company highlighted in Marijuana Stock Scams was touted on
the Internet through the use of sponsored links, investment profiles and
spam email, including one promotional piece claiming the stock "could
double its price SOON." Yet the company's balance sheet showed only
losses, and the company stated elsewhere that it was only beginning to
formulate a business plan.
Marijuana Stock Scams also includes smart tips to help investors
spot and avoid these potential scams.
FINRA is the largest non-governmental regulator for all securities firms
doing business in the United States. FINRA is dedicated to investor
protection and market integrity through effective and efficient
regulation and complementary compliance and technology-based services.
FINRA touches virtually every aspect of the securities business - from
registering and educating all industry participants to examining
securities firms, writing and enforcing rules and the federal securities
laws, informing and educating the investing public, providing trade
reporting and other industry utilities, and administering the largest
dispute resolution forum for investors and registered firms. For more
information, please visit our website at www.finra.org.
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