- Securities fraudsters are capitalizing on coronavirus to push false claims about publicly traded companies, the SEC warned in a Tuesday statement.
- Microcap stocks are the most vulnerable to third-party fraud schemes.
- The announcement came amid otherwise general good feeling in the stock market Tuesday, with all major indices notching gains.
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The Securities and Exchange Commission gave investors a new reason to be on edge about the threat coronavirus poses to markets: fraud.
There have been a number of false internet campaigns claiming that various publicly listed companies have goods or services that can "prevent, detect, or cure" coronavirus, the SEC said in a Tuesday statement.
There is a "substantial potential for fraud at this time," according to the SEC, adding that many fraudulent schemes present themselves as research reports.
The warning came on the second day of gains in US stocks, with all major indices reflecting newfound optimism after last week's sessions left stocks battered. Still, it's the latest risk in the pile of worries investors have faced as they try to gauge the impact coronavirus will have on global growth, and their portfolios.
The smallest publicly traded companies are more vulnerable to third-party fraud schemes, because there is limited public information on them, the SEC said. Investors who buy shares in companies based off of false or misleading statements the company itself makes may never be able to regain their lost funds, such as in instances where the company is suspended from public exchanges.