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Securities

Protect Yourself Against Covid-19 Investment Fraud

The Massachusetts Securities Division of the Office of the Secretary of the Commonwealth reminds Massachusetts residents to beware of investment scams related to the COVID-19 pandemic. The pandemic has had a significant impact on the financial markets which has caused wild swings in the US stock market and markets around the world. In addition, physical isolation, job uncertainty, financial strains, and increased online engagement make investors vulnerable to fraud. Catastrophic news regarding financial markets, viral outbreaks and the COVID-19 pandemic can be overwhelming to the ordinary investor.

If you are one of the many millions of Americans with a significant portion of your savings, particularly retirement savings, in stocks, these market ups and downs may be taking a toll on your portfolio and your emotions. It is at times like these that fraudulent schemes emerge to exploit investor panic. Some of these pitches may promote companies that can prevent, detect, or cure COVID-19. Others tout products or services to combat the pandemic. Some things to be aware of:

  1. Be cautious and check out claims made by companies related to the prevention, detection or cure of COVID-19.
  2. Claims of high returns with little to no investment risk are often scams;
  3. Claims of high returns in return for a small upfront investment are often scams; and
  4. Beware of any investment pitch that creates a false sense of urgency that requires you to make immediate decisions.

In addition, investors may also be persuaded by unscrupulous brokers or investment advisors to make wholesale changes to their current portfolios. Before making investment decisions, Massachusetts investors should consider these tips:

  1. Know and understand that market volatility is part of investing in the stock market;
  2. Take a step back and look at your portfolio over a longer period of time;
  3. Carefully consider your existing investment objectives before considering decisions to radically “rebalance” your portfolio;
  4. Request and carefully consider additional information about investments in other so-called “safe” products; and;
  5. Call the Secretary of the Commonwealth's Massachusetts Securities Division's Toll Free Hotline at 1-800-269-5428 to confirm that the company or individual is properly licensed to conduct the business in question has no history of violating the law.

As always, make sure to fully understand any investment and if the investment sounds too good to be true, it's probably a scam.