INVESTOR ALERT: INVESTMENT NEWSLETTERS USED AS TOOLS FOR FRAUD
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Company Filings More Search Options. Investment newsletters come in many forms. They may be found online or in hard copy; they may be available for a fee or free of advisory newsletter for options trading pitcher. Some newsletters address general securities topics, such advisory newsletter for options trading pitcher which types of stocks, bonds, or funds might make good investments.
Others may provide commentary and analysis about particular companies, investment products, or financial trends. While many investment newsletters are legitimate, some are used to carry out schemes designed to deceive investors. Such schemes can include:. Some investment newsletters claim to be sources of unbiased information, when in fact the newsletter publisher will make a lot of money if the newsletter convinces investors to buy or advisory newsletter for options trading pitcher particular stocks.
Do not take comfort because a newsletter encourages you to purchase or sell a stock through your own brokerage account. Even if you do not give the newsletter publisher any money to place trades for you, the newsletter publisher may profit from your trading activity.
For example, you may purchase a stock causing the stock price to rise and then the newsletter publisher may sell its shares of that stock profiting at your expense. If a newsletter promotes a particular stock, read carefully what the newsletter says about compensation it receives and look for these red flags:.
Even if a newsletter makes specific disclosures about being compensated for promoting a stock, be aware that fraudsters may include such disclosures to create the false appearance that the newsletter is legitimate. Fraudsters may also use newsletters as a way to get their foot in the door to pitch fraudulent investments by phone.
Be careful if someone tries to get you to subscribe to a newsletter and then calls you with specific investment recommendations. When considering any potential investment, watch out for these warning signs of investment fraud:. Some entities that issue investment newsletters are registered with the SEC as investment advisers and have certain responsibilities and obligations. If a newsletter provides a disclaimer stating that it is not published by a registered investment adviser, keep in mind that the entity issuing the newsletter is disclaiming these responsibilities and obligations.
Before making any investment based on information in an investment newsletter, independently and thoroughly investigate the investment opportunity. For more information about how to evaluate a potential investment, read our publication Ask Questions. Social Media and Investing — Avoiding Fraud. A Guide for Investors. Securities and Exchange Commission. Investor Alerts and Bulletins. Such schemes can include: Touting — promoting a stock without properly disclosing compensation received for promoting the stock.
Scalping — recommending a stock to drive up the stock price and then selling shares of the stock at inflated prices to generate profits.
Undisclosed conflicts of interest — falsely claiming to provide independent analysis or failing to explain conflicts of interest or biasesincluding financial incentives, that may influence the investment recommendations. If a newsletter promotes a particular stock, read carefully what the newsletter says about compensation it receives and look for these red flags: Be suspicious if the newsletter does not disclose having received any compensation.
Be skeptical of newsletters that do not specifically disclose who paid them, the amount, and the type of payment. The following examples raise red flags because they do not contain specific information: Questions about your stock purchases.
Be careful if a newsletter representative asks you detailed questions about your stock purchases like how many shares you bought, when you purchased the shares, or which broker you used to buy the shares.
The newsletter publisher may make money based on the amount advisory newsletter for options trading pitcher shares its subscribers buy. When considering any potential investment, watch out for these warning signs of investment fraud: Promises of high investment returns.
Be highly suspicious if the promoter guarantees you a high rate of return on your investment. Be skeptical if the promoter pitches the investment as a "limited time only" opportunity, especially if the promoter claims to base the advisory newsletter for options trading pitcher on "inside" or confidential information. Sounds too good to be true. Exercise caution if the investment sounds too good to be true. Investments providing higher returns typically involve more risk. Additional Resources Investor Alert: Report possible securities fraud.