Investment Scams May Seek to Exploit Natural Disasters – Investor Alert

After a natural disaster strikes, fraudsters may try to take advantage of individuals who want to help fund recovery efforts or who receive lump sum insurance payouts.

Fraudsters may use recent natural disasters, including Hurricane Laura, Hurricane Sally, and the wildfires on the West Coast, to lure victims into investment scams. These scams can take many forms.   

• Bad actors may direct you to make “investments” in companies supposedly involved in cleanup, repair and recovery efforts.
• They may promote the stock of companies that supposedly will reap huge profits from recovery and cleanup efforts, and then sell their own shares of the stock at the inflated price.  This is called a “pump-and-dump” scam.

Fraudsters may attempt to reach individuals on a large scale through unsolicited emails, on social media, or by telephone. The bad actors also may directly target individuals receiving money from insurance companies or other sources. They may make false claims of affiliation with state and federal governments or large, well-known companies.

Be Skeptical and Ask Questions

Be skeptical if you are approached by somebody touting an investment opportunity. When considering any investment, one of the best ways to avoid investment fraud is to ask questions.

• Ask the person if he or she is licensed and if the investment is registered with the SEC or with a state.
• Use Investor.gov’s free and easy search tool to check the background, including license and registration status, of anyone who tries to sell you an investment.
• You also can use the SEC Action Lookup – Individuals (SALI) feature on SEC.gov to find information about certain people who have had judgments or orders issued against them in SEC court actions or administrative proceedings.

Remember that promises of high guaranteed returns with little or no risk is a classic sign of a scam like a Ponzi scheme or offering fraud. 

Protect Your Money

Take a close look at your entire financial situation before making any investment decision, especially if you received a large payment to assist with recovery efforts. Remember, your payment may have to help finance your recovery as well as last you and your family for a long time.

Additional Resources

• SEC Monitoring Impact of Hurricane Laura on Capital Markets
• Don’t be Fooled by Fraudsters Offering “Charitable” Investments — Investor Alert
• SEC Publication: Lump Sum Payouts: Questions You Should Ask Yourself before You Invest a Dime
• Affinity Fraud
• Protect Your Investments
• Saving and Investing: a Roadmap to Your Financial Security through Saving and Investing (also available in Spanish)

Call OIEA at 1-800-732-0330, ask a question using this online form, or email us at Help@SEC.gov.

Visit Investor.gov, the SEC’s website for individual investors.         

Receive Investor Alerts and Bulletins from OIEA by email or RSS feed. Follow OIEA on Twitter @SEC_Investor_Ed. Like OIEA on Facebook at facebook.com/secinvestoreducation.