You might want to think twice before investing in a company claiming to
offer a product or service linked to the crisis in Japan. The Financial
Industry Regulatory Authority (FINRA) issued an alert on May 4th cautioning
investors to be on the lookout for companies seeking to capitalize through
disaster-related investment scams.
FINRA identified several types of suspicious crisis-related claims from
companies in poor financial condition or promising huge gains. These included
- New radiation detection technology;
- Earthquake-resistant building development;
- Radioactive waste cleanup.
In an official statement on May 4th, John Gannon, the FINRA Senior Vice
President for Investor Education, stated “FINRA's Office of
Fraud Detection and Market Intelligence is on heightened alert when natural
disasters occur and actively monitors for potential fraudulent investment
schemes. Unfortunately, natural disasters are opportunities for ruthless
perpetrators to concoct get-rich-quick schemes leveraging the media attention
paid to rescue and relief efforts.”
The official FINRA alert also contains tips for spotting and avoiding
these potential scams.