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Warning signs for certain
foreign stock scams
Beware of Reload or Recovery
Room Scams
Investors who have purchased U.S. stock, whose price
can be easily manipulated, often find themselves the victims of secondary scams
based on scam artists’ representations that they will help the victim recover
all or some of their losses. The scammers realize that many
investors are desperate to recoup their losses and are vulnerable to yet another
fraud. They tell the investor that they can help recover the losses by
purchasing the stock or exchanging the stock for better quality securities, but
only after the investor pays a fee (perhaps 30% of the investment) for taxes,
deposits or a bond to facilitate the transaction. If an investor falls for the second scheme, he or she
may be hit for yet a third time by scam artists posing as law enforcement
officials or a legal firm that tells the victim that they are trying to
apprehend or sue the crooks, but in order to do so will require the investor to
advance additional funds (5 to 15% of the original investment) to a third party
or the fictitious law firm. See the following websites for how these types of scams
operate:
http://www.sec.gov/investor/pubs/fleecing.htm and
http://www.tv.cbc.ca/national/pgminfo/boiler/index.html
Tips
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Investigate before you invest.
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Before investing in a
foreign company or with a foreign broker-dealer/investment advisor, contact the
local and national securities regulatory authorities (such as the Securities and
Exchange Commission) of the jurisdiction in which the company is located.
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Before investing in a foreign
company or with a foreign broker-dealer/investment advisor, contact a reputable
local broker to assist you in evaluating the merits and risks involved with a
proposed transaction.
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Contact your own securities
regulators for information about the company or the investment in question.
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Check with organizations such
as the
Better Business Bureau or the
National Fraud Information
Center.
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