Be on the Lookout for Investment Scams Related to Hurricane Ida

Sept. 3, 2021

The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to help educate investors, including individuals who may receive lump sum payouts from insurance companies and others as a result of damage from Hurricane Ida, about investment scams.

Hurricanes, floods, oil spills, and other disasters often give rise to investment scams. These scams can take many forms, including promoters touting companies purportedly involved in cleanup and repair efforts, trading programs that falsely guarantee high returns, and classic Ponzi schemes where new investors’ money is used to pay money promised to earlier investors.

Some scams may be promoted through email and social media posts promising high returns for small, thinly-traded companies that supposedly will reap huge profits from recovery and cleanup efforts. For example, the SEC brought a number of enforcement actions against individuals and companies who made false and misleading statements about alleged business opportunities in light of damage caused by Hurricane Katrina in 2005. Some of those cases involved pump-and-dump scams where fraudsters used bogus “news” to pump up the stock price of small companies so they could sell their own shares at artificially high prices. Fraudsters also may target individuals receiving compensation from insurance companies.

Individuals, including those receiving lump sum insurance payouts, should be extremely wary of potential investment scams related to Hurricane Ida.

Be Skeptical and Ask Questions

One of the best ways to avoid investment fraud is to ask questions. Be skeptical if you are approached by somebody touting an investment opportunity. Ask that person whether he or she is licensed and whether the investment they are promoting is registered with the SEC or with a state. Check out their answers with an unbiased source, such as the SEC or your state securities regulator. Know that promises of fast and high profits, with little or no risk, are classic signs of fraud. Read our short publication Ask Questions before making any investment.

Protect Yourself

Contact the SEC. If you are thinking about investing and have questions, call the SEC’s Office of Investor Education and Advocacy at 1-800-732-0330, or ask a question using this online form.

Take a close look at your entire financial situation before making any investment decision, especially if you are a recipient of a lump sum payment. Remember, your payment may have to last you and your family for a long time. Below is a list of online resources that may help.


This Investor Alert represents the views of the staff of the Office of Investor Education and Advocacy. It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This Alert, like all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.

Source: SEC

Related Posts