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February 06, 2020 at 10:11 AM
The Securities and Exchange Commission is urging investors to be on the lookout for investment frauds related to the coronavirus, as the agency has spotted what looks to be such scams via internet and social media promotions.
The agency’s Office of Investor Education and Advocacy released an Investor Alert on Wednesday warning about investment frauds involving claims that a company’s products or services will be used to help stop the coronavirus outbreak.
“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,” the SEC’s Office of Investor Education and Advocacy said.
The promotions often take the form of so-called “research reports” and make predictions of a specific “target price,” the SEC said.
“We urge investors to be wary of these promotions, and to be aware of the substantial potential for fraud at this time,” the alert states.
Microcap stocks may be particularly vulnerable to fraudulent investment schemes, including coronavirus-related scams, the agency states, as the low-priced stocks issued by the smallest of companies often have “limited publicly available information” about their management, products, services and finances.
