U.S. securities regulators are warning investors about a rise in marijuana-related investment scams.
The Financial Industry Regulatory Authority (FINRA) issued a new investor alert Tuesday warning investors about potential pump and dump scams related to the marijuana business, which have been in the news lately with medical marijuana now legal in almost 20 states, and the recent legalization of recreational use in two states.
“The con artists behind marijuana stock scams may try to entice investors with optimistic and potentially false and misleading information that in turn creates unwarranted demand for shares of small, thinly traded companies that often have little or no history of financial success,” it says.
“Investors considering investing in a heavily touted, thinly traded company should question why a total stranger would tell them about a really great investment opportunity. In reality, there is likely no true opportunity,” said Gerri Walsh, FINRA’s senior vice president for investor education.
Walsh advises investors to check out investments and their promoters with FINRA and the U.S. Securities and Exchange Commission’s (SEC) database of company filings.