BP oil spill investment scams make an appearance
The Securities and Exchange Commission is alerting individuals and small businesses about potential investment frauds targeting those who receive lump sum payouts from BP due to the oil spill in the Gulf.
According to the SEC's investor alert, that scam artists may target payout recipients with oil spill-related investment opportunities that promise high returns with little or no risk, or involve secretive or complex strategies. Members of religious or ethnic communities, professional organizations, or other close-knit affinity groups could be likely targets for these scams because of the high level of trust that often exists within these groups and their tendency to share information with one another.
The SEC's investor alert suggests steps that individuals can take to avoid fraud, such as asking extensive questions and double-checking answers with an unbiased source. It also contains tips and resources for deciding how to use a lump sum payout. The SEC also has begun working with public libraries near BP claims centers to distribute a special package of financial education materials to Gulf residents.
"We have seen firsthand how recipients of highly publicized payouts can become targets for investment fraud," said SEC Chairman Mary L. Schapiro. "In addition to our education efforts, we are on the lookout for any securities scams in the Gulf area attempting to defraud individuals, families, and businesses who already are financially strapped."
After Hurricane Katrina, many scams targeted individuals receiving compensation from insurance companies. These scams took a number of forms, including trading programs falsely guaranteeing high returns, promoters touting companies purportedly involved in clean-up efforts, as well as classic Ponzi schemes.
"We are working with public libraries to provide BP payout recipients and other Gulf residents with the information they need to invest wisely and avoid fraud," said Lori J. Schock, Director of the SEC's Office of Investor Education and Advocacy.
The SEC's Invest Wisely materials for Gulf residents include educational brochures and other helpful information. Order a free sample folder by e-mailing a request to LibraryOutreach@sec.gov.