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How to Avoid Nutraceutical Stock Scams: FINRA

May 17, 2012
[ by Melanie Gretchen ] FINRA warned investors about the rise of stock scams related to companies selling everything from fortified foods and energy drinks to "natural" medicines.  Pitches for neutraceutical stocks vary from cold calls to e-mail, tweets, blogs, or message board posts. In a new Investor Alert called Nutraceutical Stock Scams—Don't Supplement Your Portfolio With These Companies, FINRA cautioned against sales of products that claim to help people to lose weight, get an energy boost, live longer, or fight the common cold. The warning also includes dietary supplements and food and drink products that contain additives purporting to provide health benefits. What to watch for:
  • unsolicited investment recommendations
  • investments that promise fantastic growth
  • "pump and dump" scams, where investors sell off their shares to leave investors with worthless stocks
"While nutraceuticals claim to help people become healthy, investing in some of the companies associated with these products can make investors' portfolios sick.  The best way investors can inoculate themselves against investment scams is to ask and check.  Find out whether the promoter is licensed using FINRA BrokerCheck, and check out the investment using the Securities and Exchange Commission's EDGAR database of company filings." -- Gerri Walsh, FINRA's Vice President for Investor Education For further details, go to [FINRA, 5/16/12].