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 companies offering:
- 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.