Step one of staying off the Financial Industry Regulatory Authority radar? Don’t lie, steal, or commit fraud. When it comes to unregulated, decentralized, emergent, unrestricted, global, mostly unaccountable investment vehicles that don’t require being an accredited investor, the best way to not attract the full weight of the law is to do your best not to be a criminal.
Whenever there’s a sweet spot in the investment world—a wild west, a gold rush— it only takes one Timothy Tilton Ayre and one HempCoin. One bad apple spoils the bunch. FINRA is the SEC’s Navy SEAL Team 6.
The Financial Industry Regulatory Authority warned, last year, that ICO stands for Pump And Dump, and that fraud is rampant in token sales. Even though crypto is much more volatile at its very baseline than any safe investment for someone who can’t afford to hold their investment through any lows or dips, the list that FINRA provided is a pretty good rule of thumb:
- Be suspicious of anyone who guarantees that an investment will perform a certain way, or makes pushy sales pitches that encourage you to “act now.”
- Do not say “yes” to cryptocurrency stock purchases from an aggressive cold caller, particularly if the recommended stocks are very low-priced.
- Use FINRA BrokerCheck to check the professional background of the individuals involved in selling the investment, as well as the firms who tout these opportunities.
- Check the SEC’s EDGAR database to find out whether the company files with the SEC.
- Be wary of stocks with huge spikes in price.
- Know where the stock trades and pay attention to any cautions associated with the stock.
And I’ll add two: don’t invest any money you can’t afford to lose (this isn’t Vegas) and caveat emptor, may the buyer beware.Leave a comment