NEW YORK (AP) -- Just say no to marijuana stock scammers.
That's the message from the Financial Industry Regulatory Authority (Finra). The industry watchdog says that con artists are luring investors to buy stock in financially unfit marijuana companies, taking advantage of the increased attention on the budding cannabis industry.
Finra said scammers promote the marijuana-related stocks using misleading information, getting investors to buy a stock of a company that has never had any financial success. The scammers then sell off their shares, leaving investors with a worthless stock. That's known as a "pump and dump" scheme.
Medical marijuana is now legal in about 20 states and Washington, D.C., and recreational use recently became legal in two states. The loosening of marijuana laws is fueling stock scammers, Finra said.
Finra said that the con artists are sending pitches for these marijuana stocks through faxes, infomercials, tweets and text messages.
"Investors considering investing in a heavily touted, thinly traded company should question why a total stranger would tell them about a really great investment opportunity," said Gerri Walsh, Finra's senior vice president for investor education.
The organization, based in Washington, said that people should research a company, its CEO and major stakeholders before investing in any stock. Finra also published an online tip sheet on how to avoid marijuana-related stock scams.