| When an investor receives a newsletter full of stock | | | | suggested as any holes in the story may be signs of |
| tips and information, the first instinct is to act quickly | | | | a possible scam. By going to the SEC, the NAAD, and |
| on the information in order to make money before | | | | the local regulatory committees, an investor can see |
| anyone else does. However, scam artists realize that | | | | where the stock's company is registered, if they are |
| investors like to make decisions in a short amount of | | | | registered, and even take a look at their financial |
| time and capitalize on this impulsiveness. This is why | | | | reports. Asking a lot of questions is the best way to |
| newsletters work so well to lure in new victims. | | | | get a fair picture of the stock and how it could |
| There are several things that investors can do in | | | | perform for the investor. |
| order to protect themselves from bad information | | | | The local state securities regulator can give an |
| that may be found in newsletters, emails, or text | | | | investor a wealth of information about a newsletter. |
| messages. First of all, the source of the newsletter | | | | In some cases, the newsletter may have been sued |
| needs to be acknowledged. This will give the reader | | | | by the SEC and that information is then kept on |
| a clear idea as to who might be benefiting from the | | | | record. Newsletters that have a history of this |
| sale of the stock. Disclosures of the information that | | | | litigation may need to be looked at more carefully. |
| are nonexistent or difficult to find might be a clue | | | | While this doesn't necessarily mean that the |
| that the newsletter has other motivations for their | | | | newsletter is false, it may point to a valid concern. |
| advice. | | | | The reason why newsletters aren't being shut down |
| Any newsletter or publication that advises you to | | | | and regulated is because they are generally |
| invest in small stocks that aren't filing reports with | | | | considered under the freedom of speech |
| the SEC should be carefully scrutinized. These kinds | | | | amendment, leaving the responsibility for good or bad |
| of stock tips are trying the famous 'pump and dump' | | | | information squarely in the reader's lap. These |
| scheme in which a little known stock is strongly | | | | newsletters can not be prohibited outright, but only |
| advised, causing many investors to invest their | | | | scrutinized for their accuracy. |
| money in the stock. The demand for the stock then | | | | Just like spam emails, newsletters that are unsolicited |
| goes up, along with the prices. However, the scam | | | | are generally not full of good advice that an investor |
| artists will then sell off their shares of the now-high | | | | should take to heart. As with any advertising, these |
| priced stock, leaving the investors with a loss for | | | | newsletters are trying to seduce an investor with |
| their initial investments. These kinds of small stock | | | | promises that will not be fulfilled. However, with a |
| are almost guaranteed to be scams or stock that | | | | little research and time, the truth of the newsletter |
| won't do well. | | | | can be clearly seen and information disregarded. |
| Researching the source of the information is strongly | | | | |