Texas Regulator Warns of Investment Fraud Sparked by Coronavirus
The Texas state regulator on Monday warned Texans about criminals trying to steal their monies using several scams tied to the coronavirus pandemic. The Texas State Securities Board said investors should not be lulled into investment frauds stemming from the ongoing outbreak.
While there are many variations of these tactics, the watchdog said that some promotions 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, saying that crooks often try to capitalize on high-profile news events to lure investors into financial cons.
“Fraudsters try to capitalize on fear, so the current pandemic means they’re in their element,” it said.
Other US regulators, including the SEC, alerted investors to these schemes, which, like the virus itself, have seeped into the US. The CFTC also identified fraudsters urging people to invest in new stocks related to the disease as among most prevalent scams attempting to take advantage of the coronavirus outbreak.
Crypto scams top emerging threats
There are different coronavirus swindles, the regulators warn. Another common scam is “pump and dump” schemes related to some penny stocks where fraudsters try to boost its price by sharing positive, but fake, information. In this case, they claim that a company managed to detect coronavirus cases or developing a new cure to prevent the infection.
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“One irritatingly common investment pitch we see over and over again is tied to stock market volatility, which we have in spades right now. Fraudulent investment offerings ranging from precious metals to real estate to complex stock market strategies are offered as a supposed hedge against stock market crashes or some other economic calamity,” the TSSB said.
The alert reminded investors to carefully research potential investments, telling them to read its ‘Top Threats to Investors in 2020’ report to recognize questionable offerings.
While the TSSB’s 2020 catalog includes many long-standing threats, it also features emerging vehicles such as cryptocurrency, which the watchdog describes as one of the greatest risks to investors this year.
Many of the traps identified by Texas authority promise high returns but provide little if any disclosure of risks and offer high commissions to aggressive sales practices.
The regulator has put the phenomenon of the crypto craze at the top of their investment scams list, highlighting that cryptocurrencies and related financial products may be nothing more than Ponzi schemes and other frauds.
Published at Mon, 23 Mar 2020 19:43:32 +0000 Texas Regulator Warns of Investment Fraud Sparked by Coronavirus