COVID-19 Related Investment Schemes Anticipated

Alabama Securities Commission Outlines What to Expect and Offer Guidance on How to Protect Yourself


Amid the ongoing COVID-19 pandemic, the Alabama Securities Commission (ASC) is alerting investors to be on guard against an anticipated surge of fraudulent investment schemes.

“In these extraordinary times the health and welfare of all must be our foremost concern, and that includes our financial health. Our primary focus remains on the protection of retail investors,” said Director Joseph P. Borg.

The ASC warns investors that the fraudulent schemes launched amid COVID-19 outbreak will not be elegant. “Scammers will begin perpetrating schemes that require little or no advance planning and minimal sophistication,” Director Borg said. “Most will simply be old scams dressed in contemporary clothing.”

The North American Securities Administrators Association (NASAA), of which the ASC is a member, anticipates fraudulent investment schemes will rise as a result of the ongoing pandemic. “Scammers will be targeting investors, capitalizing on recent developments in the economy and preying on concerns about the regulated securities market,” said Director Borg. “Investors must remain vigilant to protect themselves.”

In particular, the ASC warned investors to be on the lookout for investments specifically tied to the threat of COVID-19. Bad actors can be expected to develop schemes that falsely purport to raise capital for companies manufacturing surgical masks and gowns, producing ventilators and other medical equipment, distributing small-molecule drugs and other preventative pharmaceuticals, or manufacturing vaccines and miracle cures. The schemes often appear legitimate because they draw upon current news, medical reports and social and political developments. 

Scammers also will seek to take advantage of concerns with the volatility in the securities markets to promote “safe” investments with “guaranteed returns” including investments tied to gold, silver and other commodities; oil and gas; and real estate. Investors also can expect to see “get rich quick” schemes that tout quickly earned guaranteed returns that can be used to pay for rent, utilities or other expenses. These schemes also target retirees and senior citizens, falsely claiming they can quickly and safely recoup any losses to their retirement portfolios.

Retail investors must remain vigilant and protect themselves from new schemes tied to COVID-19 and recent economic developments. The ASC suggests investors stay clear of anything sounding too good to be true, such as guarantees of high returns with no risk, and vet their investment professional about their licenses and registrations. 

Investors should also contact the ASC with questions about any investment opportunity or the person offering it for sale before investing in the product. Afterwards may be too late. For more information, visit the ASC website at: .

INVESTOR BEWARE: Schemes to Watch for and How to Protect Yourself

How to Protect Yourself

The ASC and NASAA provides the following guidance and tips to help investors avoid anticipated schemes seeking to take advantage of unsuspecting consumers and investors.

The ASC cautions citizens who are new or experienced investors to thoroughly scrutinize and research any investment opportunity or offer. Contact the ASC at 1-800-222-1253 to check out any person or financial professional offering an investment opportunity or investment advice for a fee, and the products they offer for proper registration. Contact the ASC to report suspected fraud, inappropriate securities business practices or to obtain consumer information. The ASC provides free investor education and fraud prevention materials in print, on our website and through educational presentations upon request.