does the purported investment sound too good to be true does it promise huge guaranteed returns are you pressured to buy right now before the stock takes off these are all common tactics used by stock touts and unscrupulous promoters and should be viewed as red flags by investors 3
affinity fraud refers to investment scams that prey upon members of identifiable groups such as religious or ethnic communities aging adults or professional groups an investment pitch from a member of a group that you are affiliated with may lead you to believe in its credibility the problem is that the member may have been unwittingly fooled into believing that an investment is legitimate when in reality it is just a scam 3before you invest your hard earned money conduct your own research and due diligence it is fairly easy to obtain a wealth of information online about legitimate companies from their business prospects and management to their financial statements the lack of such information can often be a red flag in itself 3pump and dump 3 0the cryptocurrency market has become the newest arena for pump and dump schemes the massive gains made by bitcoin and ethereum have kindled tremendous interest in cryptocurrencies of every stripe unfortunately cryptocurrencies are particularly well suited for pump and dump schemes because of the lack of regulation in the cryptocurrency market its opaqueness and the technical complexity of cryptocurrencies a study conducted in 2018 examined the prevalence of pump and dump schemes in the cryptocurrency market researchers identified more than 3 400 such schemes over the course of just six months observing two group messaging platforms popular with cryptocurrency investors 4in march 2021 the u s commodity futures trading commission cftc advised customers to avoid pump and dump schemes that can occur in thinly traded or new cryptocurrencies the cftc also unveiled a program that would make any whistleblower eligible for a monetary reward of between 10 and 30 as long as they reveal original enforcement action that leads to monetary sanctions of 1 million or more against a pump and dump scheme 5