NASHVILLE — The Tennessee Department of Commerce & Insurance’s (TDCI) Securities Division along with the North American Securities Administrators Association (NASAA) and FINRA (Financial Industry Regulatory Authority) are encouraging Tennessee investors to proceed cautiously when it comes to new investment opportunities as fraudsters continue to take advantage of the buzz surrounding companies promoting products and services related to the COVID-19 pandemic.
“The COVID-19 pandemic has shown us that scam artists are willing to make big promises in order to capitalize on investors’ fears and uncertainty,” said TDCI Commissioner Hodgen Mainda. “I urge investors to ask questions and do their due diligence about an investment before spending money on a supposed ‘can’t miss’ opportunity. Tennessee investors should remember the old adage: ‘If it sounds too good to be true, it probably is.’”
With the world focused on the pandemic, scammers are preying upon unsuspecting investors by continuing to peddle supposed “miracle” cures or purportedly innovative technologies. No cures or vaccines for the coronavirus currently exist. Investors should be wary of schemes they see on the Internet and social media that claim to be raising money for companies promising new health care products that can detect, treat or cure the coronavirus. While some of these claims could be legitimate, many will ring hollow, leaving investors with nothing but broken promises and empty pockets.
“Inexperienced retail investors may fall victim to scammers willing to use tried and true scams such as promising investments that deliver a guaranteed high rate of return in order to exploit the global health crisis,” said TDCI Assistant Commissioner Elizabeth Bowling. “If investors have questions about an investment opportunity or the salesperson, they should immediately contact TDCI’s Securities Division at (615) 741-5900 or contact us through our website before investing.”
These pitches may include offers to invest in medical technology or healthcare companies by purchasing membership units in general or limited partnerships, stocks or “penny stocks,” or through other investment vehicles, including private placement offerings, initial coin offerings or other cryptocurrency-related investors or crowdfunding. (To learn more about these products, see the “Additional Resources” section of this press release below.)
State and provincial securities regulators recently launched an enforcement initiative to disrupt investment schemes related to the pandemic. Many of the schemes shared common characteristics.
Even when investment offerings are made in accordance with the law, many are highly speculative and subject to the forces of market demand and competition. Be wary of optimistic offers, especially when made during a crisis.
Check the SEC's website to find out whether the company files any reports or other disclosures with the SEC. Read the reports and disclosures and verify any information you have heard about the company.
Before making any investment decision, make sure you understand what you are investing in and who you are doing business with. You can verify the status of investment professionals and find out whether they have a history of customer harm by contacting TDCI at 615-741-3187 or use the tools available from the SEC and FINRA.