Oil And Gas Investment Scams Widespread
With the volitility in oil prices, investors looking to make a quick buck are losing millions of dollars to sham oil and gas investments.
Typically, these deals involve swindlers who assure investors they can profit from high energy prices by investing in oil wells, for example, or alternative energy sources. State and federal regulators say that while some such investments are legitimate, others are mostly lures used by fraudulent individuals to rip people off. Below are some tips that will help you avoid becoming a victim to such scams.
1. Ask questions and check out the answers. Scammers rely on the sad truth that many people simply don’t bother to investigate before they invest. It’s not enough to ask a promoter for more information or for references – those promoting a scam have no incentive to set you straight. Savvy investors take the time to do their own independent research. Learn about the background of the company and its employees.
2. Contact state oil and gas regulatory agencies. You may be able to verify information provided in offering materials by contacting the oil and gas regulatory agency in the state where wells are allegedly being drilled. For example, these agencies generally have information about a company’s drilling history that could confirm (or discredit) claims of prior success. Unfortunately, state oil and gas regulatory agencies don’t have uniform names. If you’re having trouble finding the agency that regulates oil and gas in a particular state, enter the state’s name, followed by “oil and gas,” into your favorite Internet search engine. The appropriate agency should be listed near the top of your search results. If you are still having trouble, call the SEC at 800-732-0330.
3. Research the company before you invest. You can contact the secretary of state where the company is incorporated to find out whether the company is a corporation in good standing. You also will want to understand the company’s business and its products or services before investing. Before buying any stock, check out the company’s financial statements on the SEC’s Web site, or contact your state securities regulator by visiting the North American Securities Administrators Web site at www.nasaa.org. All but the smallest public companies have to file financial statements with one of the two organizations. If the company doesn’t file with either entity, you’ll have to do a great deal of work on your own to make sure the company is legitimate and the investment appropriate for you. Remember that unsolicited materials should never be used as the sole basis for an investment decision. Also remember that in certain instances you can consult with your team security representative to conduct a business check on the company.
4. Know the salesperson. Spend some time checking out the person touting the investment before you invest–even if you already know the person socially. Always find out whether the securities salespeople who contact you are licensed to sell securities in your state and whether they or their firms have had run-ins with regulators or other investors. You can check out the disciplinary history of brokers and advisers quickly–and for free–using the SEC’s and FINRA’s online databases. Your state securities regulator may have additional information. You can also see if the financial advisor is registered with the NFL Players Association Player Financial Advisor program.
5. Be on the lookout for your protection. You have worked hard for your money, so invest it wisely. If you encounter a problem with an oil and gas investment, you can send the SEC a complaint using their online complaint form at www.sec.gov/complaint.shtml.
- NFL Players.com
