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SEC: Look Out for Coronavirus-Related Investment Scams

February 14, 2020 Blog

Unfortunately, while humanitarian crises bring out the best in some people, they bring out the worst in others. As the death toll from the Wuhan coronavirus continues to rise around the world, the U.S. Securities and Exchange Commission (SEC) has issued a warning that individual investors need to be wary of coronavirus-related investment fraud scams. If you are concerned that you may have lost money in a coronavirus investment scam, you should speak with a securities fraud attorney promptly.

Investors Should Be Cautious about Any Investment Promotions Related to Coronavirus Prevention, Detection or Cures

In an Investment Alert issued on February 4, 2020, the SEC warned specifically of investment scams involving claims related to companies that are supposedly positioned to help fight the coronavirus outbreak. According to the SEC:

“We have become aware of a number of Internet promotions, including on social media, claiming that the products or services of publicly-traded companies can prevent, detect, or cure coronavirus, and that the stock of these companies will dramatically increase in value as a result. . . .  We urge investors to be wary of these promotions, and to be aware of the substantial potential for fraud at this time.

We’ve seen similar scenarios in the past, with fraud artists seeking to take advantage of everything from flu outbreaks to natural disasters. With regard to the current wave of coronavirus-related investment fraud scams, the SEC is advising individual investors to be particularly cautious of:

  • Promotions that supposedly cite “research reports” (these “research reports” often do not actually exist)
  • Promotions advertising a specific “target price” that a stock will supposedly reach as a result of the company providing prevention or treatment services or medications to cure the coronavirus
  • Microcap (or low-priced) stock offerings, which are often sold aggressively and used for pump-and-dump schemes

Warning Signs for Coronavirus-Related Investment Fraud Scams

While investment fraud scams are becoming increasingly sophisticated in the Internet age, there are still a number of hallmarks that point to the likelihood of an investment “opportunity” being fraudulent. For example, some of the warning signs of modern investment fraud scams include:

  • Unsolicited offers received via email or on social media
  • YouTube videos that promote a wealthy lifestyle
  • Limited-time offers and “opportunities” that are only available to a limited number of investors
  • Other tactics designed to get you to act quickly and invest without making an informed decision

We have covered these (and other) issues extensively on our blog. For more information, you can read 5 Warning Signs That Your High-Yield Investment May Be a Scam and 7 Signs You Have an Investment Fraud Claim.

Speak with a Securities Fraud Attorney for Free

If you have any reason to believe that you may have lost money in a coronavirus-related investment fraud scam, we encourage you to contact us immediately. One of our attorneys will be happy to speak with you over the phone and determine if you may be entitled to recover your investment losses. To schedule a free initial consultation as soon as possible, call 212-742-1414 or tell us what happened online now.

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