SEC Alert: Beware Of ICO Scams

SEC Alert: Beware Of ICO Scams

The US Securities and Exchange Commission (SEC) issued a warning about potential internet coin offering (ICO) scams by public companies. According

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The US Securities and Exchange Commission (SEC) issued a warning about potential internet coin offering (ICO) scams by public companies.

According to a report published at CNBC (cnbc.com), the warning aims to inform investors about the potential risks involved in putting money into public companies that “pump” the prices of their offerings with “new and emerging technologies”.

“One way fraudsters seek to profit is by engaging in market manipulation, such as by spreading false and misleading information about a company (typically microcap stocks) to affect the stock’s share price.”, as SEC wrote in a statement.

“They may spread stock rumors in different ways, including on company websites, press releases, email spam, and posts on social media, online bulletin boards, and chat rooms.  The false or misleading rumors may be positive or negative.”, the commission added.

SEC is also offering some tips for investors, so that they don`t fall victims to scams:

  • Always research a company before buying its stock, especially following a trading suspension. Consider the company’s finances, organization, and business prospects. This type of information often is included in filings that a company makes with the SEC, which are available for free and can be found in the Commission’s EDGAR filing system.
  • Some companies are not required to file reports with the SEC. These are known as “non-reporting” companies. Investors should be aware of the risks of trading the stock of such companies, as there may not be current and accurate information that would allow investors to make an informed investment decision.
  • Investors should also do their own research and be aware that information from online blogs, social networking sites, and even a company’s own website may be inaccurate and potentially intentionally misleading.

The full list of tips as well as additional resources provided by SEC can be found at the following link.

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