Much like it’s marijuana counterpart, FINRA is now warning investors on potential e-cigarette scams. It’s a oft-repeated story of stock manipulation and pump-and-dump. The warnings always include the beware of stocks/companies that come into public existence by way of reverse merger, particularly those that have emerged or are on the Pink Sheets.
FINRA warns of the following:
If there is reverse merger activity, there are a few other details on the reverse merger side that are worth noting that make pump-and-dump more likely:
While the perpetrators of such scams utilize many of the same oft-repeated tactics that have been employed in duping investors for decades, the sophistication in the “cover-up” seems to be ever increasing. Social media and the general viral nature of the internet may contribute to more scams in the future. Buyer beware.