Information About Investing Online
Windowofworld.com – How do you investing online? The internet is a great tool for everyone, including investors because of the speed of its response, and the amount of information that is exchanged. Transactions are executed very quickly, with the click of a button or a few keystrokes. However, the Internet is also another avenue for fraud. Investors should exercise caution and use common sense when using the Internet for securities activities.
The fact that information appears on the Internet gives no additional credibility to the information. Be careful if the identity of the source is not identified.
Through the Internet, investors can buy company securities directly from the company. Treat online transactions like you would any ordinary investment, and ensure that securities are registered or exempt under federal and state laws.
As an alternative, investors can trade securities through an online broker. Learn and understand the terms, conditions and fees for this service, before you use it. Brokers must be licensed, and must be registered with the Stock Exchange Commission.
Lastly, be careful with the information you collect from chat rooms. It is in these chat rooms that people posing as credible sources transmit information to pump up the stock price. As the price of these shares rises, they discard, or sell, their shares at large profits. This is called the pump and drain scheme.
Avoid Cyber Fraud
The following steps, according to the Association of North American Securities Administrators (NASAA) and the Better Business Bureau (BBB) can help you stay alert when you are online.
1. Don’t expect to get rich quick When evaluating the investments you’ve learned online; take the same care and judgment as you would with any unusual investment opportunity. Old rule If that sounds too good to be true, it probably applies to offers made online as they are made through other media.
2. Download and print a hard copy of any online request you are considering. This document may be useful if problems develop at a later date. Be sure to note the Internet address, date and time of the offer.
3. Don’t assume that an online computer service keeps an eye on its investment bulletin boards. Most services take a hands-off approach to sifting through the claims made in message posts, and even those with minimal surveillance can’t keep up with the millions of messages posted each month. Remember, too, that anyone can create a website or advertise online, usually without checking the validity of their claim.
4. Never buy stocks that are not widely known, thin trading is strictly based on the hype online. Low volume stocks are the most vulnerable to manipulation because their price can be moved through relatively small strategic trades. Even if hyped stocks start to rise, proceed with caution this may just be part of the overall manipulation scheme.
5. Be careful when acting on the advice of individuals who hide their identity. The use of aliases on computer bulletin boards is intended to protect privacy, but fraudsters can also exploit them. The people online may not be who they claim to be. What looks like two or more different people talking about stocks is actually an individual with a vested interest in raising its price through false information or unsubstantiated speculation. Additionally, an impressive looking website could be a laptop computer product in another part of the world, away from the jurisdiction of US law enforcement regulators.
6. Don’t be fooled by claims of insider information such as delayed news releases, contract announcements and innovative new products in cyberspace, almost anyone can say anything. Despite the many hot tips strewn on bulletin boards and discussion groups, it is highly unlikely that genuine insider information will be publicly broadcast on investment bulletin boards.
7.Be skeptical about claims that online stock hippers have personally examined investments.One well-established tactic of investment planners is to talk about companies, mining operations, and factories in remote countries or the world, where it is unlikely the average investor to investigate or visit in person.
8. Take the time to investigate any outside sources of investment information that you study online. Check with a trusted financial advisor and always get written financial information, such as prospectuses, annual reports, offer circulars, and financial reports. Ask the online promoter where the company was founded, and contact the Secretary of State or the Commissioner of Securities to verify that information. Also, ensure that the investment opportunity and the person promoting it are properly registered with your country’s securities agent. In Hawaii, the agent to contact is the Business Registration Division of the Department of Commerce & Consumer Affairs.
9. If you think you’ve been cheated, don’t be shy to complain. Early action increases your chances of getting your money back and can prevent others from losing money. If you see potential online investment scams, contact your state securities administrator, the Better Business Bureau (808) 942-2355, or The Federal Trade Commission (415) 356-5270.