Oil Spill Stock Scams—Don’t Get Cleaned Out by False Cleanup Claims
The oil spill in the Gulf of Mexico poses more than an environmental and economic threat to the region. It also poses a financial threat to investors in the form of scams promising financial gains from investments in companies that claim to be involved in cleanup operations.
Millions of dollars are being spent daily on short-term cleanup of the spill, which began in April 2010 with a blowout at an oil-drilling platform off the coast of Louisiana. The cost of long-term remediation remains unknown given the uncertainty about the extent of damage to the environment, the fishing industry and tourism.
The staff of the Securities and Exchange Commission and FINRA are issuing this alert to warn investors about potential scams that exploit the Gulf oil spill and related cleanup efforts. While some of the companies touting their role in the cleanup may be legitimate, others could be bogus operations that are only looking to clean out unsuspecting investors.
In a recent action, on May 25, the SEC suspended trading in shares of ACT Clean Technologies Inc., of Huntington Beach, Calif. The Commission took this action because of questions about the accuracy and adequacy of publicly disseminated information concerning, among other things: (1) British Petroleum's purported expression of interest in using a so-called oil fluidizer technology purportedly licensed to ACT's wholly-owned subsidiary for use in cleanup operations in the Gulf of Mexico; and (2) the purported results of field tests finding that the oil fluidizers are effective for use in cleanup efforts in the Gulf of Mexico.
Spotting Potential Oil Spill Stock Scams
Some companies may issue press releases, or send unsolicited faxes or spam emails that might include:
*Claims to have products or technologies that are effective in remediating oil spills or restoring the eco-system
*Mention of contracts or expected contracts with BP, formerly British Petroleum, that will aid the cleanup effort
*Claims that the company is providing technical assistance or expertise to BP or to U.S. government agencies such as the Coast Guard or the Environmental Protection Agency
*Predictions of rapid, exponential sales growth
*Pressure to invest immediately
Here are some tips to avoid potential scams:
Investigate before you invest. Never rely solely on information contained in an unsolicited fax, email, text message or tweet—or in a blog post or online thread. It's easy for companies or their promoters to make glorified claims about product effectiveness, lucrative contracts, or the company’s revenues, profits or future stock price.
Find out who sent the message. Many companies and individuals that tout stocks are paid to do so by the company being touted. Examine the fine print for any statements indicating payments in cash or in stock for issuing the report or message.
Find out where the stock trades. Most unsolicited fax and spam recommendations involve stocks that do not meet the listing requirements of the major stock exchanges. Instead, they usually are quoted on the OTC Bulletin Board or in the Pink Sheets, which do not impose minimum qualitative standards. Many of the securities quoted on the OTC Bulletin Board or in the Pink Sheets trade infrequently, which can make it difficult to sell your shares. When shares on the OTC Bulletin Board or in the Pink Sheets do trade, they may move up or down in price very rapidly.
Read a company’s SEC filings. Most public companies file quarterly and annual reports with the SEC. Check the SEC’s EDGAR database to find out if the company is filing reports to the SEC, and read them. Be aware that registering securities and filing reports with the SEC does not mean the company will be a good investment.
Exercise some skepticism. Scammers are very adept at making their pitches appear real, including the use of slick videos and websites. Be extremely wary of any pitch that suggests immediate pay-offs, especially if the investment involves a start-up company or a product or service that is still in development.
If you’re suspicious about an offer or if you think the claims might be exaggerated or misleading, please contact us:
SEC Office of Investor
Education and Advocacy
http://www.sec.gov/complaint.shtml
FINRA Complaint Center
http://www.finra.org/complaint
Additional Resources
http://www.sec.gov/answers/hurricane.htm
http://www.sec.gov/litigation/suspensions/2010/34-62166.pdf
http://www.sec.gov/answers/pumpdump.htm
http://www.finra.org/Investors/ProtectYourself/AvoidInvestmentFraud/
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April 20, 2010
Investor Warning Relating to Eric V. Bartoli, Enrico Orlandini,
and DT Analysis a/k/a and Dow Theory Analysis SAC
April 14, 2010
The staff of the Securities and Exchange Commission (SEC) has received credible information suggesting that an individual named Eric Bartoli, who was previously sued by the SEC for securities fraud, may currently be located in Peru and engaged in securities solicitations of investors, using the alias Enrico Orlandini. The staff’s information indicates that Bartoli/Orlandini is operating through a company named DT Analysis a/k/a Dow Theory Analysis SAC. Investors who are solicited by these named persons or entities should take steps to satisfy themselves that the offer is legitimate and complies with the law. Investors are encouraged to review the SEC publication “Ask Questions” and other SEC publications located at http://www.sec.gov/investor.shtml before making any investment. Some questions investors may consider asking include:
For more information about the SEC’s prior enforcement action against Bartoli, see Securities and Exchange Commission v. Latin American Services Co., Ltd., Cyprus Funds, Inc., Eric V. Bartoli, Douglas R. Shisler, James L. Binge And Peter J. Esposito, Case No. 99-2360-CIV-UNGARO-BENAGES (S.D. Fla.) Litigation Release No. 16768 / October 16, 2000, available at: http://www.sec.gov/litigation/litreleases/lr16768.htm, and Advisers Act Release No. 1995/November 7, 2001, available at: http://www.sec.gov/litigation/admin/ia-1995.htm. Bartoli was also the subject of a criminal action by the U.S. Department of Justice. See U.S. v. Bartoli, 5:03 CR 387, October 16, 2003 (N.D. Ohio).
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Investors Beware of Phony
SIPC "Look-Alike" Website Targeting Madoff Victims
The SEC is warning investors about a website that falsely claims that $1.3 billion in Madoff money has been found in Malaysia and encourages individuals to submit information to verify that they are on a refund list. The website was created as a fake mirror image of the Securities Investor Protection Corporation’s (SIPC) website.
To prevent Madoff victims from disclosing confidential financial information because they hope to recover some of their losses, SIPC issued a press release warning them about a fictitious entity known as the International Security Investor Protection Corporation (ISIPC). The ISIPC website mimics almost exactly the look, feel, and content of SIPC's website – with one notable exception. The ISPIC website claims to partner with several legitimate governments, including the United States – linking to web pages maintained by these governments. ISIPC also falsely claims to be sponsored by the United Nations, the International Monetary Fund, the World Bank and the IBA. The IBA was the subject of an earlier investor alert.
Con artists worldwide often target investors who already have lost money in a financial fraud. These con artists rely on the victim’s desire to recoup their losses as quickly and as fully as possible, encouraging individuals to submit information to verify that they are on a refund list.
It’s not hard to figure out who the real regulators and legitimate entities are and how you can contact them. But make sure the URL matches the ones listed below:
For more tips on investing wisely and avoiding fraud, please read Fake Seals and Phony Numbers and visit the Investor Information section of our website.