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Tips for Checking Out Online Newsletters

Find out whether the newsletter received payment to "tout" or recommend the stock and, if so, what it received and from whom.

Read carefully what the newsletter says about payments it receives.

Be suspicious of newsletters that do not specifically disclose these items: who paid them, the amount, and the type of payment. Legitimate on-line newsletters that have been paid to tout stocks will clearly and specifically tell investors who paid them, the amount, and the type of payment. Look for their disclosure statements in articles about particular companies or in a list or chart on their websites.

Independently investigate the company or investment opportunity.

Be wary of anyone who encourages you to invest in small, thinly-traded stocks that aren't well known and don't file reports with the SEC. Assume that everything you read about those companies in an on-line bulletin board, newsletter, or chat room is untrue until you prove by your own independent research that it isn't. 

Don't invest in small, thinly-traded companies unless you're prepared to lose every penny.

Because small, thinly-traded companies are usually the most risky investments that you can make, you should always get as much written information as you can from the company and other independent sources. The SEC and your state's securities regulator should always be your first stops, but you may also want to visit your local library and talk with the librarian about other sources of information. There are also a number of commercial services that provide a constant stream of information about the financial condition of companies.

Check with the SEC or your state securities regulator to see if the newsletter has ever been in trouble.

Whenever the SEC sues a newsletter or stock promoter, we issue a "litigation release" and post it on our web site. Check the Enforcement Division's home page to see whether we've brought action against a newsletter or stock promoter who's touting a stock. You can also search the SEC's non-EDGAR database for this information.

Your state securities regulator can tell you whether the broker pushing the stock or the broker's firm has a disciplinary history by checking the Central Registration Depository (CRD). You can also obtain a partial disciplinary history by contacting NASD's toll-free public disclosure hot-line at (800) 289-9999 or visiting their website at http://www.nasd.com.

 

 

Investigate Before You Invest |Top Ten Questions To Help You Avoid Trouble | Avoiding Online Investment Scams:  Tips for Investors | Fraud In Cyberspace | Tips for Checking Out Online Newsletters: | Internet Fraud: Investor Tips | Choosing an Investment Professional | Cold Callers Must Follow Certain Rules | Portrait of a "Boiler Room" | Where the Frauds Are | Where the Frauds Are Part 2 | Fake Seals and Phony Numbers | Investor Alert | Tips for Avoiding Stock Scamson the Internet | Risky Business: "Pre-IPO" Investing | Avoiding Internet Investment Scams | Microcap Stock: A Guide for Investors | Trade Execution | Your Dollars at Risk | Tips for Online Investing | Questions asked about your Investments | Day Trading Ads: Cutting Through the "Bull" | Futures and Options: What You Should Know Before You Trade | Investment Risks | Invest Wisely: An Introduction to Mutual Funds | Variable Annuities: What You Should Know  FAQ On Bond Investing