One way or another, this happens every time there a disaster.
It’s not just the Gulf of Mexico that’s being sullied by the BP oil spill – it could also affect your pocketbook.
The state Department of Financial Institutions and the Securities & Exchange Commission have issued an alert aimed at investors who may be presented with “scams promising financial gains from investments in companies that claim to be involved in cleanup operations.”
Regulators have issued the alert “to warn investors about potential scams that exploit the Gulf oil spill and related cleanup efforts. While some of the companies touting their role in the cleanup may be legitimate, others could be bogus operations that are only looking to clean out unsuspecting investors.”
On May 25, the SEC suspended trading in shares of ACT Clean Technologies Inc. of Huntington Beach, Calif. The commission took this action, said a release from DFI, because of questions about the accuracy and adequacy of certain information the company issued. publicly.
The alert goes on to say that some companies may issue press releases or send unsolicited faxes or spam emails that might include:
• Claims comcerning products or technologies that are effective in remediating oil spills or restoring the eco-system;
• Mention of contracts or expected contracts with BP, formerly British Petroleum, that will aid the cleanup effort;
• Claims that the company is providing technical assistance or expertise to BP or to U.S. government agencies such as the Coast Guard or the Environmental Protection Agency
• Predictions of rapid, exponential sales growth;
• Pressure to invest immediately.
To avoid becoming a scam victim, the agency advises:
• Investigate before you invest. Never rely solely on information contained in an unsolicited fax, email, text message or tweet—or in a blog post or online thread. It’s easy for companies or their promoters to make glorified claims about product effectiveness, lucrative contracts, or the company’s revenues, profits or future stock price.
• Find out who sent the message. Many companies and individuals that tout stocks are paid to do so by the company being touted. Examine the fine print for any statements indicating payments in cash or in stock for issuing the report or message.
• Find out where the stock trades. Most unsolicited fax and spam recommendations involve stocks that do not meet the listing requirements of the major stock exchanges. Instead, they usually are quoted on the OTC Bulletin Board or in the Pink Sheets, which do not impose minimum qualitative standards.
• Read a company’s SEC filings. Most public companies file quarterly and annual reports with the SEC. Check the SEC’s EDGAR database to find out if the company is filing reports to the SEC, and read them. Be aware that registering securities and filing reports with the SEC does not mean the company will be a good investment.
• Exercise some skepticism. Scammers are very adept at making their pitches appear real, including the use of slick videos and websites. Be extremely wary of any pitch that suggests immediate payoffs, especially if the investment involves a start-up company or a product or service that is still in development.
If you’re suspicious about an offer or if you think the claims might be exaggerated or misleading, visit the SEC Office of Investor Education and Advocacy