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Stock market fraud "survivor" checklist
June 16, 2005 01:37 PM EST | Consumer Info , Investment | Email to Friend | Comments (0)
Investor enthusiasm for the Internet has created tremendous financial opportunities in recent years – for stock market fraudsters! That's because they often use the Internet to lure innocent investors into their scams. But you can survive stock market fraud and avoid becoming a victim if you follow these steps before you invest:
- Be Skeptical When you see an offer on the Internet, consider it a scam until you can prove it's legitimate through your own independent research.
- Consider the Source Remember that the people touting a stock may be company insiders or paid promoters who stand to profit at your expense.
- Independently Verify Claims Don't rely solely on claims by companies or promoters about new product developments, lucrative contracts, or the company's financial health.
- Beware of High Pressure Pitches Watch out for promoters who pressure you to buy before you have an opportunity to fully research an offer.
- Research the Company Always ask for – and carefully read – the company's prospectus and current financial statements.
- Confirm Registration Check the SEC's EDGAR database or your state securities regulator to make sure the company is properly registered or legally exempt from registration.
For more information on how to use the Internet to invest wisely and avoid fraud, visit the SEC's Internet and Online Trading www.sec.gov/investor/online.shtml web page.
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