On August 20, 2013, FINRA issued a new Investor Alert called “Marijuana Stock Scams” to warn investors about potential related scams. Medical marijuana is legal in almost 20 states, and recreational use of the drug was recently legalized in two states. As a result, the cannabis business has been getting a lot of attention – including the attention of scammers. Like many investment scams, pitches for marijuana stocks may arrive in a variety of ways – from faxes to email or text message invitations, to webinars, infomercials, tweets or blog posts.
The con artists behind marijuana stock scams may try to entice investors with optimistic and potentially false and misleading information that in turn creates unwarranted demand for shares of small, thinly traded companies that often have little or no history of financial success. The scammers behind these “pump and dump” scams can then sell off their shares, leaving investors with worthless stock.
One company highlighted in “Marijuana Stock Scams” was touted on the Internet through the use of sponsored links, investment profiles and spam email, including one promotional piece claiming the stock “could double its price SOON.” Yet the company’s balance sheet showed only losses, and the company stated elsewhere that it was only beginning to formulate a business plan.
“Marijuana Stock Scams” also includes smart tips to help investors spot and avoid these potential scams.
Any investor interested in speaking with a securities attorney can contact David A. Weintraub, P.A., 7805 SW 6 Court, Plantation, FL 33324. By phone: 954.693.7577 or 800.718.1422.