Touting "China" Stocks Latest "Pump and Dump" Scheme, NASD Alert Says
Washington, D.C. — 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 email@example.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.
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