NASD is warning investors to be wary of faxes, emails and even cell phone text messages touting low-priced "China" stocks of companies that often have no affiliation with China or its stock markets.
A new NASD Investor Alert - "China" Stocks-Look Beyond the Name Before You Invest - explains how fraudsters entice investors to purchase bogus stocks that promise exponential price growth. One fax promoted a purported China stock with the headline, "Grabbing massive profits in China has never been easier than right now!" It went on to promote a company whose shares were "ripe to pop" for "a low price that's unheard of, and quite temporary." The fax urged investors to "load up on the stock now!" Fraudsters use these efforts to pump up the stock's price, then sell off their shares, usually leaving investors with a stock valued at much less than when they purchased it.
"The fact that a company has 'China' in its name can be misleading, especially since most of the companies being peddled are not even incorporated in China," said NASD Chairman and CEO Mary L. Schapiro. "The best way to avoid being taken in by a scam is to ignore these unsolicited stock recommendations or at the very least investigate the company and its claims before investing."
NASD encourages investors to report these scams by forwarding stock spam emails to spam@nasd.com, where the information will be reviewed for possible investigation. In addition to giving investors detailed advice on how to distinguish stock scams from legitimate opportunities, the Alerts also offers tips on how to make sound decisions and where to go to learn more about a company or stock before investing in it.
For additional information, see the NASD Investor Alerts: Stock Spams and Scams; "I hope this is your email" Scam Offers No Hope of Profits; Beware of "Hot" Stock Tips on Your Cell Phone; and Market Risk: What You Don't Know Can Hurt You. To receive NASD's latest Investor Alerts and other important investor information via email, sign up for NASD's Investor News.
NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD offers a broad range of tools and programs to help people better understand investing and know how to protect themselves along the way — including developing and publishing Investor Alerts, brochures and online resource guides on such critical topics as mutual fund class shares and 401(k) and college savings plans. NASD has distributed this information through its Web site, printed materials and Investor Forums.
NASD touches virtually every aspect of the securities business — from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web site at www.nasd.com.
("Copyright 2007 National Association of Securities Dealers, Inc.")
