Individual Investors Must Be Wary of Social Media Investment Promotions, Even From Well-Known Personalities
As an investor, you need to make sound decisions based on accurate information that you obtain from reliable sources. Unfortunately, in today’s world, this is easier said than done. Individual investors face a barrage of misinformation, and even seemingly-trustworthy sources can lead investors astray. As securities fraud attorneys who represent individual investors, these are facts that we know all too well.
While there are a number of red flags for misinformation about investment opportunities, not all fraudulent practices are easy for investors to spot. This is particularly true when the source of the information in question seems to be reliable. With this in mind, as a general rule, individual investors need to be wary of any investments being promoted through social media, and they must rely on the advice of their trusted investment professionals when making investment decisions.
Famous Software Businessman John McAfee Charged with Fraudulently Promoting Initial Coin Offerings (ICOs) on Twitter
As one example, the U.S. Securities and Exchange Commission (SEC) recently charged computer security company McAfee Corp.’s founder, John McAfee, with fraudulently promoting initial coin offerings (ICOs) on Twitter. According to the SEC, McAfee is accused of offenses including:
- “Pretending to be impartial and independent,” despite receiving more than $23 million to promote the ICOs in question;
- Denying that he received compensation for promoting the ICOs when asked by certain investors; and,
- Falsely representing that he had personally invested in some of the ICOs and was advising the companies involved.
The SEC’s complaint goes on to allege that as a result of McAfee’s statements on social media, “investors were left holding digital assets that are now essentially worthless.”
While this is a recent example (the SEC announced its charges against McAfee on October 5, 2020), it is far from the only example of high-profile individuals getting into trouble for unlawfully promoting investment opportunities on Twitter and other social media platforms. Business owners, celebrities, professional athletes, brokers and others have faced charges in relation to unlawfully promoting securities on social media as well. For individual investors, the message is clear: You cannot believe everything you read online, and you must independently verify the information you use to make investment decisions.
What if You Relied on Fraudulent Representations about an Investment Opportunity?
If you relied on fraudulent social media representations regarding an investment opportunity, what are your legal rights? Ultimately, the answer to this question depends on the specific circumstances involved in your case. To find out if you may be able to recover your fraudulent investment losses, you should speak with a securities fraud attorney promptly.
Schedule a Free Consultation with a Securities Fraud Attorney at Zamansky, LLC
Have you lost money in an investment that you made based on information that turned out to be false or misleading? If so, our securities fraud attorneys may be able to help you recover your investment losses. To learn more in a free and confidential consultation, call 212-742-1414 or tell us how you would like to be contacted online now.