Facebook IPO: Regulators warn of stock scams

We’re often bringing you news about social networking giant Facebook and sometimes it’s more to do with the business aspect rather than the social aspect. Not long ago we told how Facebook was planning its IPO (initial public offering) next year and more recently we told of Facebook’s meteoric ad revenue. Now we have news for you about regulators warning of stock scams surrounding Facebook’s IPO.

Today investors received a warning from the Financial Industry Regulatory Authority (FINRA), saying that non-existent shares in pre-iPO social media companies were being hawked. FINRA senior vice president for investor education, John Gannon said, “Investors might think they are getting in on the ground floor of innovative social media companies, but instead find that they may have handed over real money for non-existent shares,” according to an AFP report.

The statement went on to say that people receiving unsolicited offers about investing should not become involved and added, “Recently, FINRA became aware of potentially fraudulent schemes to sell purported shares of Facebook.” Apparently over 50 investors were recently scammed out of $9.6 million by investing in purported shares for various social media companies.

John Hazard over on ZDNet tells more about this particular scam and also lists some good advice from FINRA on how to avoid being taken in with seemingly good deals, so for 8 good tips on that head to the above link. What are your thoughts on these scams? Do you think people are too easily taken in by schemes that look too good to be true? Let us know with your comments.