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FINRA ALERT: GOLD STOCKS
A new investor alert from the Financial Industry Regulatory Authority cautioned investors about scams related to investment in gold stocks. The alert, titled, “’Gold’ Stocks—Some Investments Mine Your Pocketbook,” provides information on legitimate gold investments and how to invest in them as well as dangers of illegitimate gold investments. The record price of gold bullion means there are many legitimate gold investments but it also means that there are a lot of scams. Furthermore, the plethora of blogs, websites, and online videos available makes finding those legitimate investments like finding a needle in a haystack.
According to FINRA’s investor alert, warning signs for gold stock scams include: exponential growth predictions or price targets, “buyout targets” for other mining companies, scare tactics (threat of inflation, etc.), claims that a new reserve will be successful because of its proximity to another reserve, a company name or symbol change that aligns the company more closely with gold, and “free lunch” programs. FINRA also warns that warning signs that are frequently seen in other stock scams like “easy” profit claims and pressure for immediate investment are also applicable to gold scams. Furthermore, FINRA suggests that investors do the following: investigate the stocks before investing, ask themselves, “Why Me?” and check SEC filings for information about the company they are considering investing with.
Some investors have already fallen prey to gold stock scams, especially since 2010. A boiler room fraud resulted in investors’ loss of over $23 million. In addition, a Ponzi scheme perpetrated by six individuals cost 3,000 investors a total of $300 million and a Florida-based mining company faced legal action by the SEC for misleading statements and false press releases.
If you require a stock fraud lawyer because of a gold stock-related investment scam, please contact the Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.