Psst ... How would you like to buy shares of Facebook before the privately held social-networking company goes public? It sounds like a great opportunity. But if you get a pitch like this, it might be a scam.
The Financial Industry Regulatory Authority is warning investors to watch out for schemes that offer access to pre-IPO shares of Facebook and other well known social media companies. "Investors might think they are getting in on the ground floor of innovative social media companies, but instead find that they may have handed over real money for non-existent shares. Any investor who receives an unsolicited offer to invest in a pre-IPO company should walk away," said John Gannon, FINRA senior vice president for investor education.
Companies can sell unregistered shares before an initial public offering of their stock. In fact, Lawrence Carrel recently wrote a Stock Watch column for Kiplinger.com about how to buy into Facebook before it goes public. Because there are legitimate ways to buy pre-IPO shares, it's important to know how to spot -- and avoid -- fraudulent offerings. FINRA offers these tips:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Avoid unsolicited offers. If you get an e-mail or a message on Facebook from someone you don't know about an offer to buy shares of a company before it goes public, ask yourself why a total stranger would want to tell you about a really great investment opportunity.
Don't fall for persuasion tactics. Almost all pre-IPO scams dangle the prospect of exclusive access to eye-popping returns at a discount if you act quickly.
Do a background check. Verify whether the person touting pre-IPO shares is licensed. FINRA has a free BrokerCheck tool to help you research brokers and firms. And you may be able to dig up information about the person or solicitation using a search engine.
Get a second opinion. If you get a tip about an investment opportunity, seek an unbiased second opinion from a licensed investment professional or an attorney before making any moves.
-
Super Micro Computer: Why This Hot Stock Could Hit $1,500Super Micro Computer's long-term AI revenue potential is underappreciated, Loop Capital says. Here's what you need to know.
-
Instant EV Tax Rebates Are a Hit: $580M Paid This YearEV Credits Claiming federal electric vehicle tax credits at the point of sale is a new and popular option in 2024.
-
Kim Kardashian's $1.3 Million Crypto Fine Is a Warning to InvestorsKim Kardashian didn't tell her instagram audience she was paid to promote a crypto token. Now, she'll pay a hefty fine.
-
Beware the Caller From “The Government”: It’s a ScamScams Scammers' persistence is matched only by their insolence: They even try to impersonate the very agencies trying to stop their grift.
-
The Best Way to Protect a Parent from ScammersScams Adult children worried about their parents’ ability to spot and avoid fraud have several options to help protect them, including a durable power of attorney, a guardianship and a revocable trust. Which might be best for your family?
-
How to Avoid a Summer of Scams – Expert Tips to Help Aging ParentsScams Financial professionals share their top tips to help avoid becoming a statistic in a summertime wave of identity theft, account hacks and telemarketing fraud.
-
5 Quick and Dirty Questions to Pick a Financial AdviserFinancial Advisers Yes, you can boil a complicated vetting process down to just five quick questions. Or you could dig deeper. The choice is yours.
-
How the Infrastructure Bill Could Change Cryptocryptocurrency Cryptocurrency's path to legitimacy runs through Washington, but it's an opportunity dressed as a threat.
-
Penny Stocks: Why You Should Always Stay AwayScams With the exception of some large foreign firms, investors should generally avoid stocks that trade over-the-counter.
-
Keep Momma Away from This Financial AdviserScams When a family member wants to be your financial adviser, watch out!
