Amid the ongoing COVID-19 pandemic, officials with the Tennessee Department of Commerce and Insurance Securities Division are alerting investors to stay on guard against an anticipated surge of fraudulent investment schemes.
“While most Tennesseans pull together to help their neighbors during times of crisis, unfortunately, bad actors seek to take advantage of emergency situations to line their pockets,” said TDCI Commissioner Hodgen Mainda, in a press release.
“I urge my fellow Tennesseans to learn the red flags of financial investment scams in order to protect themselves during the COVID-19 pandemic. If consumers have questions about an investment offer that may seem fraudulent, they should contact members of our team.”
TDCI’S Securities Division warns investors in the press release that the fraudulent schemes launched amid COVID-19 outbreak will not be elegant.
“In these extraordinary times the health and welfare of all must be our foremost concern, and that includes our financial health. Our primary focus remains on the protection of retail investors,” said TDCI Assistant Commissioner, Securities Division Elizabeth Bowling, in the press release.
“Scammers will begin perpetrating schemes that require little or no advance planning and minimal sophistication. Most will simply be old scams dressed in contemporary clothing.”
The North American Securities Administrators Association, of which the TDCI Securities Division is a member, anticipates fraudulent investment schemes will rise as a result of the ongoing pandemic, the press release said.
“Scammers will be targeting investors, capitalizing on recent developments in the economy and preying on concerns about the regulated securities market,” Bowling said.
“Investors must remain vigilant to protect themselves.”
In particular, TDCI’s Securities Division is warning investors to stay on the lookout for investments specifically tied to the threat of COVID-19. Bad actors can develop schemes that falsely purport to raise capital for companies manufacturing surgical masks and gowns, producing ventilators and other medical equipment, distributing small-molecule drugs and other preventative pharmaceuticals, or manufacturing vaccines and miracle cures. The schemes often appear legitimate because they draw upon current news, medical reports and social and political developments, the press release said.
Scammers also will seek to take advantage of concerns with the volatility in the securities markets to promote “safe” investments with “guaranteed returns” including investments tied to gold, silver and other commodities; oil and gas; and real estate. Investors also can expect to see “get rich quick” schemes that tout quickly earned guaranteed returns that can be used to pay for rent, utilities or other expenses. These schemes also target retirees and senior citizens, falsely claiming they can quickly and safely recoup any losses to their retirement portfolios, the press release said.
Retail investors must remain vigilant and protect themselves from new schemes tied to COVID-19 and recent economic developments. TDCI’s Securities Division suggests investors stay clear of anything sounding too good to be true, such as guarantees of high returns with no risk, and vet their investment professional about their licenses and registrations.
Investors should also contact the Securities Division with questions about any investment opportunity or the person offering it for sale before investing in the product. For more information, visit the Securities Division homepage at https://www.tn.gov/commerce/securities-division.html
– – –
Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected].
