New Haven, CT (Law Firm Newswire) November 21, 2011 - With the price of gold skyrocketing, many novice and seasoned investors are looking to get in on the action. Since the market for this commodity is so hot, unfortunately scam artists are setting up bogus luncheons, seminars, and companies to bilk individuals out of their money. The Financial Industry Regulatory Authority (FINRA) recently published an Investor Alert, "Gold" Stocks – Some Investments Mine Your Pocketbook.
“Investors need to be wary of whom they place their investments with and research the financial consultant and firm before they spend their money and effort on it,” said Connecticut stock market loss attorney Michael Stratton. “FINRA has shown that there are illegitimate companies posing as authorities on gold stocks, but can never follow through on their claims of profits and more.”
The Securities Exchange Commission (SEC), which oversees FINRA, has recently taken of running a Ponzi scheme via investment seminars that took $300 million from 3,000 investors throughout the United States and Canada. Also, three precious metals firms had a telemarketing company that falsely purchased more than $23 million of precious metals for clients. And, a Florida company was charged with sending out false press releases about an Ecuador mining project that had gold reserves worth more than $1 billion.
“There are steps you can take to recover losses when someone fraudulently takes your money in an investment scam,” said Stratton. “It is important to save all documentation about your investments and get legal help as soon as you are aware of something that does not seem right with your investments. There are, of course, normal fluctuations and losses, but these scams can lead to even more devastating losses.”
FINRA recommends that anyone who wants to invest in gold be on the lookout for:
• Statements that claim to align a stock’s performance to rising gold prices as the correlation does hold any guarantees for a rise in prices
• Tactics that use the fear of an economic downturn or inflation to merit buying gold
• Untested claims about a new gold reserve’s closeness to another successful reserve
• Companies who have changed their name or symbol to ride the profitability of the gold market, but have no actual experience in the industry
• Unfounded claims on blogs and websites, as well as YouTube videos and Tweets
It is often a better strategy to diversify an investment strategy as putting all of one’s investments into gold can lead to increased volatility, FINRA reports. Too much investment in one asset class can overly expose an investor to losses.
Stratton Faxon is a Connecticut personal injury law firm specializing in stock market losses, medical malpractice, wrongful death, birth injury, truck accidents, and malpractice. Their attorneys are members of the Public Investor Arbitration Bar Association and skilled in securities litigation. To learn more, visit the Connecticut personal injury law firm at http://www.strattonfaxon.com.
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