Marijuana scams growing like weeds, US regulators warn
NEW YORK (REUTERS) - Investors in marijuana-related stocks may see their profits go up in smoke, US regulators said on Tuesday.
The Financial Industry Regulatory Authority (Finra), Wall Street's industry-funded watchdog, warned that scammers have been targeting investors attempting to tap into the growing marijuana industry in the United States.
Nearly 20 states permit the use of marijuana for medical purposes, and voters in Washington and Colorado recently made recreational use legal as well.
Finra said red flags for investors range from the classic "pump and dump" in which con artists boost the price of thinly traded stocks by misleading investors about a company's potential, then sell their shares at a peak to executives with criminal records.