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Disaster-related Investment Scams

May 11, 2011

Oil spills, hurricanes, floods, and other disasters often give rise to investment scams. Some are circulated through "spam" emails, promising unbelievably high returns for small, thinly-traded companies that supposedly will reap huge profits from recovery and cleanup efforts. Promises of fast and high profits, with little or no risk, are classic red flags of fraud. Remember — if it sounds too good to be true, it usually is! For more information, read the Securities and Exchange Commission's brochure, "Internet Fraud: How to Avoid Investment Scams," or the tip sheet, "Stock Market Fraud: 'Survivor' Check List."

Before making any investment — online or offline — it pays to do research to make sure the company exists, that its products are genuine, and that its claims are legitimate. If a company is registered with the SEC, you can find the company’s financial statements on the SEC's website, filed electronically through "EDGAR." If a company is not registered with the SEC, check with your state securities regulator before investing.

The Office of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions conce
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