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FINRA Warns of Investment Scams in the Wake of the Japan Tragedy

You might want to think twice before investing in a company claiming to offer a product or service linked to the crisis in Japan. The Financial Industry Regulatory Authority (FINRA) issued an alert on May 4th cautioning investors to be on the lookout for companies seeking to capitalize through disaster-related investment scams. FINRA identified several types of suspicious crisis-related claims from companies in poor financial condition or promising huge gains. These included companies offering:

  • New radiation detection technology;
  • Earthquake-resistant building development;
  • Radioactive waste cleanup.

In an official statement on May 4th, John Gannon, the FINRA Senior Vice President for Investor Education, stated “FINRA's Office of Fraud Detection and Market Intelligence is on heightened alert when natural disasters occur and actively monitors for potential fraudulent investment schemes. Unfortunately, natural disasters are opportunities for ruthless perpetrators to concoct get-rich-quick schemes leveraging the media attention paid to rescue and relief efforts.” The official FINRA alert also contains tips for spotting and avoiding these potential scams.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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