SEC warns about coronavirus investment scams

Respiratory distress isn’t the only threat posed by coronavirus. It seems investment scams are spreading too, the U.S. Securities and Exchange Commission (SEC) has warned in an alert.

The SEC’s Office of Investor Education and Advocacy issued an investor alert on Tuesday that cautions people against investment frauds stemming from the ongoing coronavirus outbreak.

The alert noted that fraudsters often try to capitalize on high-profile news events to lure investors into fraudulent scams.

In this case, the SEC noted that it has “become aware” of multiple online promotions involving claims that a company’s products or services will be used to help stop the coronavirus outbreak, and that this can dramatically boost a company’s stock price.

The SEC said that these promotions often use purported “research reports” and predict specific “target prices” for a company’s stock. The regulator also warns of “the substantial potential for fraud at this time.”

“Be cautious of claims that a company’s products or services can help stop the coronavirus, especially claims that involve microcap stocks. These claims may be made as part of fraudulent ‘pump-and-dump’ schemes,” it said.

The alert reminded investors to carefully research potential investments, telling them to “keep in mind that investment scam artists often exploit the latest crisis to line their own pockets.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.