Do your homework before investing in penny stocks

Published: Updated:
MGN Online

FORT MYERS, Fla. – Penny stock emails have surged in recent months and regulators are warning investors to be careful!

Websites and emails claim you can get  big returns with little investment in penny stocks.

But that isn’t the entire truth.

“They are considered very risky stocks,” said Postal Inspector Virginia Columbo.

As the stock market rose to all-time highs, investors have been buying shares of these small companies at a record pace. Regulators have been tracking this activity and  have a warning consumers to beware of the tactics used to pump up penny stocks.

Promoters, who probably stands to benefit from his or her own share of the stock, can blast spam out saying “this is the “deal of the century” or the company is about to make a “major announcement” we recommend you “buy this as soon as possible.”

“The promoters and the scammers that have the financial benefits to sell it will dump. The stock will drop and all of the new investors who bought all this stock will be out all of the money they just invested and it’s worth nothing essentially,”said Columbo.

Postal Inspectors say investors should be skeptical of email tips and do your own homework before investing in a penny stock.

We checked with the Florida Office of Financial Regulation for more information on how to protect yourself when investing. Here are some tips:

–Do your homework
–Get a second opinion
–Do a license check of the company or individuals with whom you plan to business.
–Get everything in writing
–Ask plenty of questions
–Sleep on it. Don’t feel pressured to make any rash decisions

For more tips, or to file a complaint if you feel like you’ve been victimized, click here to get in touch with the Office of Financial Regulation.

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