Budding Medical Marijuana Industry Attracts Wall Street Scammers
Investors getting glassy-eyed over the potential riches to be made in the "dot bong era" of legalized pot may want to proceed with caution. The Financial Industry Regulatory Authority issued a warning this week about "potential scams associated with marijuana-related stocks."
FINRA, a securities regulator, says that the nascent medical marijuana industry, which has been celebrated under headlines like "Yes We Cannabis" and "The Audacity of Dope" has attracted fraudsters trying to pass off pump-and-dump stock schemes:
Like many investment scams, pitches to invest in potentially fraudulent marijuana-related companies may arrive in a variety of ways—faxes, email or text message invitations to webinars, infomercials, tweets or blog posts. Regardless of how you first hear about them, the offers almost always contain hallmarks of "pump and dump" ploys. Specifically, fraudsters lure investors with aggressive, optimistic—and potentially false and misleading—statements or information designed to create unwarranted demand for shares of a small, thinly traded company with little or no history of financial success (the pump). Once share prices and volumes reach a peak, the cons behind the scam sell off their shares at a profit, leaving investors with worthless stock (the dump).
Bitcoin, another industry with no shortage of optimistic pitches despite its questionable legality, has also attracted con artists.
http://gawker.com/budding-medical-marijuana-industry-attracts-wall-street-1179801415