CNBC.com video above published Dec 22, 2017: Bitcoin's skyrocketing stocks push cryptocurrency mania — and scams — to new highs, but FINRA's guidelines could help investors avoid getting duped.
- Israel regulator seeks to ban bitcoin and other cryptocurrency firms from trading on the Tel Aviv Stock Exchange | reuters.com.
- Belarus adopts crypto-currency law to woo foreign investors | reuters.com, law also allows local IT companies to operate in part under English law, a provision meant to attract potential foreign investors.
FINRA Warns Investors: Don’t Fall for Cryptocurrency-Related Stock Scams | FINRA.org: "... "It can be difficult for investors to avoid the lure of the cryptocurrency markets, especially when prominent people express interest in it, and news reports and social media tout the promise of guaranteed quick fortunes and skyrocketing returns," said Gerri Walsh, FINRA’s Senior Vice President for Investor Education. "But it is important to do your research. Even when legitimate companies enter a hot, new sector, con artists almost always follow suit." Before investing in any cryptocurrency-related stock, buyers should follow these tips to avoid costly mistakes:
- 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.” If you think the claims might be exaggerated or misleading, contact the SEC, file a complaint using FINRA’s online Complaint Center or send a tip to FINRA's Office of the Whistleblower.
- Do not say "yes" to cryptocurrency stock purchases from an aggressive cold caller, particularly if the recommended stocks are very low-priced. Not answering at all, or putting down the phone, are generally the safest responses to a cold caller or anyone aggressively pitching low-priced stocks or other investment opportunities.
- 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. Selling securities generally requires a license and registrations under state and federal securities laws and FINRA rules.
- Check the SEC's EDGAR database to find out whether the company files with the SEC. If so, read the reports and verify any information you have heard about the company. But remember, the fact that a company that has registered its securities or filed reports with the SEC doesn't mean it will be a good investment.
- Be wary of stocks with huge spikes in price. Steep run-ups in price could signal potential manipulation or fraud.
- Know where the stock trades and pay attention to any cautions associated with the stock. Most stock pump-and-dump schemes tend to be quoted on an over-the-counter (OTC) quotation platform like OTC Markets, which provides icons to warn investors of concerns associated with a given company. These include a stop sign or skull and crossbones to warn of questionable practices.
In the U.S., the Financial Industry Regulatory Authority, Inc. (FINRA) (domain: finra.org) is a private corporation that acts as a self-regulatory organization (SRO). FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD) and the member regulation, enforcement and arbitration operations of the New York Stock Exchange. It is a non-governmental organization that regulates member brokerage firms and exchange markets. The government agency which acts as the ultimate regulator of the securities industry, including FINRA, is the Securities and Exchange Commission (Domain: SEC.gov).
Similarly, the Commodity Futures Trading Commission (CFTC) is the U.S. financial regulatory agency tasked with overseeing the U.S. derivatives markets (domain: cftc.gov). Read the CFTC Statement on Self-Certification of Bitcoin Products by CME (cmegroup.com), CFE (cfe.cboe.com), and Cantor Exchange (cantorexchange.com).
The National Futures Association (NFA) is the industrywide SRO for the U.S. derivatives industry. Read NFA Investor Advisory—Futures on Virtual Currencies Including Bitcoin | nfa.futures.org:
"December 1, 2017 The purpose of this investor advisory is to remind investors that, just like any other speculative investment, trading futures on virtual currencies, including Bitcoin, have certain benefits and various risks. While futures on virtual currencies must be traded on regulated futures exchanges, trading these products involves a high level of risk and may not be suitable for all investors. It is critical, therefore, for investors who are considering trading virtual currency futures to educate themselves about these products, understand their risks, and conduct due diligence before making investment decisions. Investor protection begins with investor education ...." (read more at link above).
Tweets by FINRAParticipate in person or via live online broadcast. Visit our website to register for the @FINRA Cybersecurity Conference. https://t.co/go9ojJWVGB #FinraCS pic.twitter.com/zcHdgeA5mY— FINRA Education (@FINRA_Education) December 19, 2017