State securities regulators warn of opportunistic investment scams following attacks on World Trade Center, Pentagon
WASHINGTON (September 17, 2001) – In the wake of terrorist attacks in New York and near Washington, DC, state securities regulators warned investors to be on the lookout for opportunistic scams similar to those associated with the Year 2000 computer bug.
Cold-calling telephone salespeople, advertisements, or Internet postings that tout commodities, exotic financial products, or supposed anti-terrorist technologies, should be a red flag for investors, regulators said. Investors should be especially wary of enticements to send their money offshore to so-called “safe havens,” they added.
“In times of tragedy, confusion, fear and uncertainty, there are always those who will attempt to prey on the investing public,” said Joe Borg, director of the Alabama Securities Commission and new president of the North American Securities Administrators Association (NASAA). “In the wake of last week’s tragedies, investors should resist the temptation to make hasty decisions about their investments or finances. Our economy is the most diverse and productive in the world, and the United States is and will remain the world’s financial capital.”
Recalling that many con artists exploited fears associated with the Year 2000 computer bug to tout investments in precious metals, emergency preparedness scams and non-existent technology companies, Borg urged investors to:
- Hang up on aggressive cold callers promoting “safe” investments such as precious metals, oil, or gas and ignore unsolicited e-mail or Internet chat room talk about small companies with new anti-terrorist technologies or products;
- Contact their state securities regulator to check that both the seller and investment are licensed and registered. If they are not, they may be operating illegally. To get the name and number of your state regulator visit www.nasaa.org or look in the white pages of your telephone directory under “government;”
- Request written information that fully explains the investment, such as a prospectus or offering circular. The documentation should contain enough clear and accurate information to allow you or your financial adviser to evaluate and verify the particulars of the investment; and
- Use common sense. Some things really are too good to be true. Get a professional, third-party opinion when presented with investment opportunities that seem to offer unusually high returns in comparison to other investment options. Pie-in-the-sky promises often signal investment fraud.