Key Takeaways
- According to a recent SEC alert, fraudsters may exploit natural disasters like wildfires, to urge people to invest in sketchy investments.
- Investment scams can include ‘pump-and-dump’ schemes or involve investments that falsely claim your money will go toward helping victims.
- If you’re solicited for one of these investments, do your due diligence by researching a person’s credentials using the official SEC website.
After wildfires devastated neighborhoods, homes, and businesses in California, individuals who want to help those impacted by the destruction should remain vigilant of possible scams.
The Securities and Exchange Commission issued an investor alert this week, warning that fraudsters may take advantage of natural disasters like wildfires to ‘lure victims into investment scams.’ These scams may also target affected individuals who are receiving funds from insurance companies.
Investment scams can vary widely. Some encourage people to invest in pump-and-dump schemes—where someone encourages people to invest in a company that assists with recovery, driving the stock price up.
Other scams may urge people to make an investment that will supposedly both generate profits for the investor and assist victims of the disaster.
If someone—virtually, by phone, or in-person—recommends an investment that’s tied to a natural disaster, exercise caution and do some research before investing, the SEC advised. The commission offers an online search tool where you can check if someone is a registered financial professional.
