February 20, 2014

Cover Story

CEO of the Year

Utah’s business landscape is rich with professionals who have le...Read More

Featured Articles

Did you go Skiing this winter?

Around Utah

Sections

Spotlight
Martin Plaehn

Spotlight
Karen Sendelback

Legal Briefs
Social Media and Employers: Friends or Enemies?

Money Talk
The Case for HSAs

Economic Insight
Time to Show Up

Lessons Learned
Make a Move

TechKnowledge
In the Lab

EntrepreneurEdge
Rent to Own

Business Trends
Back from the Dead

Executive Living
Artful Inspiration

Features
A Breath of Fresh Air

Features
Worst-Case Scenario

Regional Report
Northern Utah

Focus
Measure Up

Industry Outlook
Travel & Tourism

Players
Players

Article

Division of Securities Warns Investors of Scam Medical Marijuana Offers

Press Release

February 20, 2014

Salt Lake City – The Utah Department of Commerce has announced that the Division of Securities is warning Utah investors to be on the lookout for investment pitches that may use medical marijuana businesses in other states as the basis for “hot” stock tips. With Fridays’ announcement by the White House that federal banking institutions will accept payments from medical marijuana dispensaries, regulators are concerned that scam artists may be looking to profit off the public’s trust.

“Before you jump into an investment promising high returns on medical marijuana, check out the sources selling it with the Division of Securities,” said Francine A. Giani, executive director of the Utah Department of Commerce. “If you rush into marijuana-related stocks without doing your homework, your savings may go up in smoke.”

Empty Promises: How to Spot a Potential Scam

Promoters may use a variety of marketing platforms to push false and misleading information about medical marijuana stocks through social media, faxes, emails, Facebook, infomercials, seminars, Twitter or blog posts. Fraudsters tend to use classic “pump and dump” scenarios to create demand for shares in a worthless company where investors lose after con artists “dump” the stock after it peaks (“the pump”).

“Our division has learned promoters are taking advantage of younger investors by advertising on popular classified websites with promises of ‘hot’ stocks ready to burn up the charts,” said Keith Woodwell, director of the Division of Securities. “Before you invest in one of these schemes, ask yourself ‘why me’? Total strangers aren’t looking to share profits with you; they’re looking to steal from unsuspecting victims.”

Tips for Investors: Avoiding Medical Marijuana Pitch Pitfalls 

Ask “why me?” Why would a total stranger tell you about a really great investment opportunity? The answer is there likely is no true opportunity. In many scams, those who promote the stock are corporate insiders, paid promoters or substantial shareholders who profit handsomely if the company’s stock price goes up. 

Consider the source. It's easy for companies or their promoters to make exaggerated claims about lucrative contracts, the company's revenue, profits or future stock price. Be skeptical about companies that issue a barrage of press releases and promotions in a short period of time. The objective may be to pump up the stock price. Likewise, be wary of information that only focuses on a stock's upside with no mention of risk.

Do your research. Contact the Division of Securities to find out if the investment is registered with the state and whether or not the individuals involved have faced prior disciplinary action. Also conduct an internet search with the names of key corporate officials and major stakeholders, as well as the company itself. Proceed with caution if you turn up recent indictments or convictions, investigative articles, corporate name changes or any other information that raises red flags.

 

Utah Business Social
UB Events View All
SAMY Awards 2015Utah Business Event
Jan 23, 2015
Utah Business magazine along with Presenting Sponsor Griffin Hill are pleased to present the 201...
Forty Under 40 - 2015Utah Business Event
Feb 26, 2015
Utah Business Magazine along with Presenting Sponsors: Kirton McConkie, BIG-D Construction and Ma...
CEO of the Year 2015 ... NOMINATIONS NOW OPEN!Utah Business Event
Mar 31, 2015
CEO of the Year Nominations end - January 7, 2015. Visit: www.utahbusiness.com/nomination_item...
Community Events View All
Anatomy Sketch Night | December 18th
Dec 18, 2014
During his life, Leonardo da Vinci sketched 100's of anatomical drawings of humans and animals. ...
Sandler Management Solutions
Dec 19, 2014
Looking for a way to manage your team systematically and effectively? Sandler Management Solutio...

info@utahbusiness.com  |  90 South 400 West, Ste 650 Salt Lake City, Utah 84101   |  (801) 568-0114

Advertise with Utah Business

Submit an Event

* indicates required information
* Event Name:
Price (general):
Website (if applicable):
Coordinator's Name:
Coordinator's Email:
Coordinator's Phone:
Venue Name:
Venue Address:
Venue City:
Venue Zip:
Event Capacity:
Date(s):
to
* Event Description:
  Cancel