A National Securities Arbitration & Investment Fraud Law Firm

American Association for Jusice
Legal Leaders
Multi-Million Dollar Advocates Forum
Top 100
Public Justice
AV Preeminent
Florida Legal Elite 2011
5th Annual Most Effective Lawyers 2009

Potentially Fraudulent Investment Schemes on Radio Programs

There are numerous radio programs that focus on discussing a wide variety of investments. These programs include very general discussions about stocks, bonds, or other funds, as well as more specific conversations, like analysis of companies, products, or financial trends. Unfortunately, some of these programs are part of a fraudulent investment scheme. As a result, when tuning into these programs, it is important for investors to listen carefully and conduct thorough research before making investment decisions. The SEC has issued an investor alert regarding investment-related radio programs used to defraud investors.

Fraudulent Schemes

Radio programs related to investments contain the risk that they are part of a fraudulent scheme designed to deceive investors or the general public. It is possible that a program sponsor or a broadcaster may be enjoying profits regardless of whether any money is given to invest. This is because increased trading activity can benefit these individuals. For example, a sponsor or broadcaster can use the program to discuss a stock, inducing people to buy shares of it in order to increase the price of the stock. The sponsor or broadcaster can then sell his or her shares at an artificially inflated price.

Some examples of potentially fraudulent schemes include:

  • Touting: promoting a security without disclosing the remuneration or compensation that is received by the radio program sponsor or broadcasters in exchange for the promotion;
  • “Pump and Dump:” artificially inflating the price of a stock of a company by making false and misleading statements about the company in order to generate increased interest in purchasing a stock and then selling the stock at the inflated price;
  • Not Disclosing Conflicts of Interest: giving the indication that an independent analysis is being provided without informing of a conflict of interest, which may include financial incentives that may impact a given investment recommendation; or
  • Fraudulent Unregistered Offerings: under the federal securities laws, companies must register their offerings with the Securities and Exchange Commission (SEC); some fraudulent schemes may discuss and promote unregistered offerings that promise high returns with minimal risk.
What to Watch For

Some signs that may be indicative of a fraudulent scheme include:

  1. Promising high returns: guarantees of certain returns is a red flag, but especially those promising high returns;
  2. Pressure to buy immediately: programs that encourage investors to invest immediately by stating things like “for a limited time only” or that the promoter has “inside” or confidential information; or
  3. High level of complexity: products or strategies that are too complex to explain or understand may be used intentionally to deceive investors.

Before making an investment decision based on a radio program, utilize tools found on the websites of the SEC and the Financial Industry Regulatory Authority (FINRA). These sites can be used to research whether any regulatory actions have been taken against the radio program. Additionally, it is important to investigate the investment opportunity yourself to determine if it fits with your investment strategy and risk tolerance.

Radio advertisements are paid commercials which are typically not vetted by the radio stations they play on. Accordingly, an ad on CNBC or other popular financial radio stations is not approved by the station or host of the radio program and should not serve as an endorsement of any investment. Celebrity spokesmen are frequently paid actors being compensated for their recommendation rather than an earnest belief in the investment.

Help for Investment Fraud

If you have suffered losses and believe it may have been caused by investment fraud or misconduct, speak with an experienced securities law attorney today. At the Silver Law Group, we provide help for victims of investment fraud through many different legal remedies.

Client Reviews
“My in-laws lost their retirement funds to a dishonest broker. Silver Law Group and Scott Silver aggressively pursued their losses until he got their money back.” Ben M.
“I foolishly gave my money to a con artist promising me a great return on my money. Scott Silver zealously handled the matter, recovering my losses.” Darren S.
“I almost lost a lifetime of earnings after trusting the wrong person. Silver Law Group guided me through the arbitration process and a mediation, always fully prepared and committed to my case.” Scott T.