Regulators Warn of Hurricane Florence-Related Scams

FINRA's alert notes that the most frequent types of scams tout the stocks of companies that purport to be associated with cleanup and rebuilding efforts. "These promotions often trumpet supposed breakthroughs in science and technology to address current and future flood-related issues, such as contamination."

Hallmarks of fraudulent pitches, the alert states, include:

• price targets or predictions of exponential growth;
• use of facts from respected news sources to bolster claims of a price runup;
• mentions of contracts or affiliations with federal agencies or large well-known companies;
• the depiction of standard corporate developments as major events;
• statements about how much easier it is for low-priced stocks to skyrocket in value in comparison to higher-priced stocks; and
• ·pressure to invest immediately.

NASAA advises investors to delete unsolicited emails or social media messages and hang up on aggressive cold callers promoting hurricane-related investments; use common sense when offered claims of guaranteed returns or low/no investment risk, which are classic red flags; and contact your state or provincial securities regulator to check that both the seller and investment are licensed and registered.

FINRA recommends that investors:

Investigate before they invest. Never rely solely on information received in an unsolicited email, text message or cold call from an "analyst" or "account executive," the self-regulator warns.

Find out who sent the message. "Many companies and individuals that tout stock are corporate insiders or are paid to promote the stock," FINRA states. "Look for statements (usually found in the fine print) that indicate cash payments or the receipt of stock for disseminating a report on the company."

Determine where the stock trades. "Most unsolicited stock recommendations involve stocks that can't meet the listing requirements of the Nasdaq Stock Market, the New York Stock Exchange or other U.S. stock exchanges," FINRA states.

Investors should also read a company's filings with the Securities and Exchange Commission. Check the SEC's EDGAR database to find out whether the company files with the SEC, FINRA advises.