With stock performance tumbling in response to the Coronavirus pandemic, companies providing virus treatment or testing might seem like a sure thing to worried investors. Unfortunately, public anxiety is fodder for COVID-19 fraud, including promotions falsely claiming that certain companies’ stocks will soar because their products can detect, prevent, or even cure COVID-19. (If that were true, we would have heard about the cure by now.)
The Securities and Exchange Commission (SEC) warns that scammers are using tactics like bogus investment reports for certain public-traded companies that supposedly provide COVID-19 products or services. These scams may be perpetrated online and through social media.
While fraudulent claims can be made about any company, the SEC cautions investors that microcap stocks are often a favorite target. These are low-priced stocks issued by very small companies, with little information available on company management, products, and finances to counter the fraudsters’ claims.
The SEC encourages the public to submit tips, complaints, or referrals on COVID-19 fraud or other suspected securities fraud at https://www.sec.gov/tcr.
Today’s Fraud of the Day comes from a Securities and Exchange Commission alert, “Look Out for Coronavirus-Related Investment Scams – Investor Alert,” published Feb. 4, 2020.
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn investors about investment frauds involving claims that a company’s products or services will be used to help stop the coronavirus outbreak.
Fraudsters often use the latest news developments to lure investors into scams. We have become aware of a number of Internet promotions, including on social media, claiming that the products or services of publicly traded companies can prevent, detect, or cure coronavirus, and that the stock of these companies will dramatically increase in value as a result. The promotions often take the form of so-called “research reports” and make predictions of a specific “target price.” We urge investors to be wary of these promotions, and to be aware of the substantial potential for fraud at this time.