Beware of COVID-19-Related Investment Scams Warns California Attorney General
Press release from the State of California Department of Justice:
California Attorney General Xavier Becerra and California Commissioner of Business Oversight Manuel P. Alvarez today issued an alert about investment scams related to the coronavirus (COVID-19). Investors should be wary of claims that companies have developed cures or vaccines for coronavirus or can supply medical equipment which is in short supply, like masks, gloves, or ventilators. These are red flags that an investment could be a scam. For example, the FBI recently arrested an individual for soliciting investments and claiming to have a cure for coronavirus. Investors should carefully research companies and claims, as well as broker-dealers and investment advisors, before investing any money.
“Fraudsters may try to take advantage of the current pandemic by claiming miracle cures or solutions to medical equipment shortages,” said Attorney General Becerra. “Investors should beware of any investment claiming to address the COVID-19 crisis. Before you relinquish your hard-earned money, fully investigate the companies and people involved. Better to research than regret.”
“In times of crisis, bad actors often prey upon investors who are especially concerned about their finances,” said Commissioner Alvarez. “California investors should be particularly careful and wary of investments related to the coronavirus.” The Attorney General and the Commissioner encourage anyone who has either been the victim of an investment scam or who otherwise has information about an investment scam to immediately file a report through http://oag.ca.gov/report or https://docqnet.dbo.ca.gov/complaint/.
California’s Corporate Securities Law prohibits the use of misrepresentations in the purchase and sale of securities. California’s Commodities Law prohibits the use of misrepresentations in the purchase and sale of commodities. Violations can result in criminal and civil liability, with penalties of up to five years in prison and a $10,000,000 fine for criminal violations and a $25,000 penalty per violation for civil liability.
Investors can research whether an individual has been the subject of an enforcement action by either the Securities and Exchange Commission or California’s Department of Business Oversight (DBO) using the SEC’s Action Lookup – Individuals and DBO’s database of actions, orders, and administrative hearings. Investors can also use the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck to find out the licensing and registration status and disciplinary history of broker-dealers. To check the licensing and registration status of investment advisers, investors can use the Securities and Exchange Commission’s Investment Adviser Public Disclosure (IAPD). Investors can use the National Futures Association’s (NFA) Background Affiliation Status Information Center (BASIC) to research the licensing and registration status and disciplinary history of commodities brokers.
For information about other coronavirus-related scams, please see Attorney General Becerra’s consumer alerts regarding fraudulent charities and false advertising. For the latest in coronavirus preparedness, information, and response, please visit the websites of the California Department of Public Health, Office of Governor Gavin Newsom, and Office of Emergency Services. If you are a worker or employer who has been affected by COVID-19, you can find guidance and resources on the California Labor and Workforce Development Agency’s website.