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Investor Protection

Internet Fraud Complaint Center

IFCC’s mission is to address fraud committed over the Internet. For victims of Internet fraud, IFCC provides a convenient and easy-to-use reporting mechanism that alerts authorities of a suspected criminal or civil violation.

For law enforcement and regulatory agencies at all levels, IFCC offers a central repository for complaints related to Internet fraud, works to quantify fraud patterns, and provides timely statistical data of current fraud trends.

Pump & Dump

One of the most common Internet investment frauds involves the classic “pump and dump” scheme. Here’s how it works: A company’s web site may feature a glowing press release about its financial health or some new product or innovation. Newsletters that purport to offer unbiased recommendations may suddenly tout the company as the latest “hot” stock. Messages in chat rooms and bulletin board postings may urge you to buy the stock quickly or to sell before the price goes down. Or you may even hear the company mentioned by a radio or TV analyst.

Unwitting investors then purchase the stock in droves, creating high demand and pumping up the price. But when the fraudsters behind the scheme sell their shares at the peak and stop hyping the stock, the price plummets and investors lose their money.

Boiler Room

Boiler room operators are sales people who sit in one room making cold calls to potential investors and trying to pressure them into purchasing worthless investments. They are usually armed with sophisticated sales scripts and high-pressure sales techniques used to convince their victims to purchase dubious investments. Their victims are usually individuals with money such as business people, professionals and retirees.

What Type of Investments do Boiler Room Operators Peddle?

Boiler room operators will try to sell:

  • Penny or Microcap stocks
  • Foreign Exchange Investments
  • Risky Initial Public Offerings (IPO’s)
  • House Stocks
Loss Recovery

Most stock and bond losses are the result of market forces, economic factors, and technical trends that have nothing to do with the advice you receive from your stockbroker or advisor. However, if you have suffered losses due to bad advice or wrongful action, you can sue your stockbroker and possibly recover some or all of your losses.

Almost all brokerage firms require their customers to contractually agree to submit all disputes to binding arbitration before some self-regulatory organization (SRO) such as the NASD, NYSE, or ASE. The new account form of a brokerage firm, that is signed by investors, is the usual binding instrument that requires arbitration for disputes. An investor can initiate a complaint and can possibly recover losses through an arbitration proceeding.

Discovering what security rules were violated come through the analysis of monthly statements, confirmations, and all correspondence. Some of the common complaints against a broker are breach of fiduciary duty, churning (excessive trading), unsuitable recommendations, misrepresentation, mutual fund switching, unauthorized trades, and front-running.

Investor Alerts

Get the facts on how to invest wisely and avoid fraud. Be wary of swindlers and scam artists. To learn more about how to avoid costly mistakes and fraud, read the SEC’s “Investor Alerts.” These publications will help you spot trouble before you lose money.

Trading Suspensions

This page lists recent SEC trading suspensions. The federal securities laws allow the SEC to suspend trading in any stock for up to ten trading days when the SEC determines that a trading suspension is required in the public interest and for the protection of investors.

Insider Trading

“Insider trading” refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.

Market Basics

New to the micro-cap markets?Get answers to your questions about investing in Small-Cap / Micro-Cap Stocks and learn how to protect yourself.

The Basics

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