Con artists often try to exploit news developments to victimize investors. And no news is bigger right now than the coronavirus that started in China and has spread to nearly 60 countries, including the United States, South Korea, Japan and Italy. Regulators say they’ve become aware of internet promotions that claim that the products or services of certain publicly traded companies can prevent, detect or cure the COVID-19 virus and that the companies’ stock prices will eventually soar. The scams, often promising high investment returns with little risk, typically involve very small companies.
Securities regulators recommend that investors be wary of such promotions and their risk of fraud. The promotions often take the form of so-called “research reports” and predict specific “target prices” for certain stocks. People can suffer significant losses if they invest in companies that are the subject of such misleading claims. By contrast, the stock prices of several legitimate and well-established companies stand to benefit from the viral outbreak. They include drug makers that are seeking to develop vaccines for the coronavirus and companies that provide teleconferencing and make disinfecting products.