Bloomberg -- Con artists are taking advantage of the legalization of medical marijuana to lure investors into buying stock in weed-related companies, regulators said.
The scammers may be promoting the shares, then selling them to gullible investors in what’s called a “pump-and-dump” scheme, the Financial Industry Regulatory Authority said today in an e-mailed statement. The companies are touting their growth potential as more states allow pot for medical or recreational use, Wall Street’s self-funded regulator said.
“Investors considering investing in a heavily touted, thinly traded company should question why a total stranger would tell them about a really great investment opportunity,” Gerri Walsh, Finra’s senior vice president for investor education, said in the release. “In reality, there is likely no true opportunity.”
Finra didn’t name any potentially fraudulent companies. The regulator recommended that investors do their own research.