The current state of the environment and economy, ranging from rising gas prices to an outcry for reduced pollution, has surged the interest in energy and alternative energy stocks. Per FINRA, this interest appears to have sparked an increase in energy-related stock scams.
FINRA issued a warning to investors regarding this type of investment fraud. Energy stock scams tend to involve a company that is not known and is typically small. There are often a lot of misrepresentations and predictions made in an attempt to attract investors. Scam artists use these schemes to get people to invest, which bump up the price of the stock. They then sell their shares, leaving investors with stock that is basically of no value.
There are legitimate energy investments out there, but it can be difficult trying to separate the good from the bad. Here are a few of the warning signs of an energy stock scam:
- Promises of immediate payoffs
- Unsubstantiated claims regarding new products, contracts or future stock price
- Stock doesn’t meet the requirements of one of the major national exchanges, such as the NASDAQ Stock Market or the New York Stock Exchange (NYSE)
- Predictions of huge returns
It is important to mention that there are some schemes out there that promote interests in fraudulent oil and gas limited partnerships. You need to be cautious when considering investing in such a limited partnership. If you think that you may have a claim, do not hesitate to contact us.