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

Fraudsters often try to use natural disasters, like Hurricanes Florence or Michael, as a way to lure victims into investment scams.  These scams can take many forms:

• Direct “investments” in companies purportedly involved in cleanup, repair and recovery efforts;
• False claims of affiliation with state and federal governments or large, well-known companies; and
• Sales of stock in small publicly-traded companies as part of “pump-and-dump” scams (promising high returns for investments in companies that supposedly will reap huge profits from recovery and cleanup efforts).

Some scams are circulated through unsolicited email.  Fraudsters may also directly 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 Hurricanes Florence or Michael.

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’s Office of Investor Education and Advocacy or your state securities regulator. 

Our short publication called Ask Questions discusses many of the other questions you should ask of anyone who wants you to make an investment.

Keep in mind that promises of high or guaranteed profits with little or no risk are classic signs of fraud. 

Things to Consider

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 help finance your recovery as well as last you and your family for a long time.

Below is a list of some online resources that may help.  If you are thinking about investing and have any questions, do not hesitate to call the SEC’s Office of Investor Education and Advocacy at 1-800-732-0330, or ask a question using this online form.

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 concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.