Facebook IPO Brings Out Scammers

DENVER (CBS4) In the month leading up to Facebook's initial public offering, IPO, of stock shares, many people had already lost thousands and thousands of dollars. The Securities and Exchange Commission, SEC, office in Denver and offices across the nation investigated tracked down several reports of scams.

"We have received a number of complaints, all offices within the SEC have received these kinds of complaints," said Donald Hoerl, director of the SEC Denver Regional office.

Scammers offer exclusive access to IPO or pre-IPO shares. Each of the scams operates a little differently, but share the common thread of trying to take advantage of people's desire to buy a superhot stock with the hope of a big payout.

"We make every effort to receive these complaints, follow up on them and do the best we can to get to the bottom of them," Hoerl said.

Cracking down on the con artists isn't always easy. The SEC relies on investors who've been contacted by these con artists to tip them off. And as the Facebook stock goes public they expect the scams to increase.

One red flag for investors should be a hard sell that pushes you to pay up immediately.

"Usually there's a sense of urgency, usually the urgency is you should invest now because it's going to go away tomorrow," Hoerl explained.

Instead, the SEC recommends you take your time. You should do your research into the investment product you're being sold, and into the person who's selling it to you.

If you do run into a scammer, you should file a complaint with the SEC, so they can investigate and potentially protect other investors.
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- Written for the Web by CBS4 Special Projects Producer Libby Smith