Green energy offers opportunities for new jobs and investments. Unfortunately, the green energy field has also attracted individuals with less than honorable intentions.
On January 6, FINRA issued an alert warning investors to be wary of green energy investments that promise large gains from investing in companies purportedly involved in developing or producing alternative, renewable or waste energy products. The new investor alert, Save Your Greenbacks–Don’t Fall for Green Energy Scams, explains how these frauds typically work. Con artists are using everything from tweets and text messages to Webinars and faxes to lure investors with very aggressive, optimistic, and potentially false and misleading statements that create unwarranted demand for shares of small, thinly traded companies, the SRO said. This is a classic “pump and dump” fraud, according to FINRA, where con artists behind the scheme then sell off their shares, leaving investors with worthless stock. Fraudsters are also using green investing as a hook for Ponzi schemes, where a scammer uses incoming funds from new investors to pay purported returns to earlier stage investors.