Additionally, the disclosures may not reveal that the underlying source of the compensation is a company insider or affiliate. What if the promoter discloses receiving compensation to promote the stock?Įven if a promoter makes specific disclosures about being compensated for promoting a stock, be aware that fraudsters may make such disclosures to create the false appearance that the promotion is legitimate. What If I received the stock promotion through a legitimate source?įraudsters may promote a stock in seemingly independent and unbiased sources including social media, investment research websites, investment newsletters, online advertisements, email, Internet chat rooms, direct mail, newspapers, magazines, and radio. However, the SEC does not endorse or otherwise approve of the information posted there. You may also consider searching for company information on the websites of DBOT ATS (), Global OTC ATS ( ), and OTC Link ATS (. Read recent reports that the company has filed with the SEC. Where can I get information about a microcap company?
Microcap stocks often are quoted on “over-the-counter” (OTC) systems (e.g., by alternative trading systems (ATSs)), such as Delaware Board of Trade ATS (DBOT ATS), Global OTC ATS (part of NYSE Group, Inc.), and OTC Link ATS (operated by OTC Markets), among other venues. Frequent changes in company name or business plan may suggest no real business operations. Frequent changes in company name or type of business. Click here to find out whether the SEC has recently suspended trading of the company’s stock. Unexplained increase in stock price or trading volume. Penny stocks that are aggressively promoted may be stocks of dormant shell companies. Be wary if the company’s stock seems to be more heavily promoted than its products or services. Unsolicited stock recommendation or heavy stock promotion. What are some warning signs of microcap fraud? In addition, it is often easier for fraudsters to manipulate the price of microcap stocks because microcap stocks historically have been less liquid than the stock of larger companies and often do not trade on a national securities exchange. This makes it easier for fraudsters to spread false information. Publicly-available information about microcap stocks (low-priced stocks issued by the smallest of companies), including penny stocks (the very lowest priced stocks), often is scarce. What are microcap stocks and why are they more susceptible to stock price manipulation? Or they may promote a company that claims to be developing products or services relating to the latest news events or trends. For example, they may publicly announce a development that is intended to affect a company’s stock price. Fraudsters often use emerging technologies or industries – including Initial Coin Offerings (ICOs) and digital assets – to entice investors as part of a fraudulent or manipulative scheme. Whoever is promoting the stock may stand to profit at your expense from pumping up the stock price and then selling shares. If you receive an unsolicited stock promotion, be cautious. Identify and Report Investment Fraud Against Seniors. Investing is A Lot Like Football - Both Need a Strong Playbook to be Successful. 
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