Regulators Warn of Oil-Spill Stock Scams
Investors should watch out for scams that exploit the Gulf of Mexico oil spill and cleanup efforts, according to a warning issued by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA).
The two regulatory groups say some companies claiming to be involved in the cleanup may be bogus operations "looking to clean out unsuspecting investors." These companies may send press releases, faxes or e-mails that might include the following:
--Claims to have products that will help clean oil spills
--Claims that the company expects to have contracts with BP or already is providing assistance to BP or government agencies
--Predictions of rapid sales growth
--Pressure to invest immediately
Don't rely only on information sent by fax or e-mail, the SEC and FINRA say. Check the SEC's EDGAR database to see it the company files reports with the SEC and read them. Find out where the company's stock trades. If it's listed on the OTC Bulletin Board or in the Pink Sheets, the stock doesn't meet standards of the major stock indexes. Finally, be wary of any offer that promises immediate pay-offs.
The SEC also announced that it suspended trading in shares of ACT Clean Technologies (symbol ACLH) because of questions about the accuracy of the company's claims about BP's interest in using its technology for cleanup operations in the Gulf. Trading of this penny stock is suspended from May 25, 2010, through June 8, 2010.