Bogus health stocks all hype

Be wary of an old scam, the pump-and-dump, regulators say. Websites let you check out companies.

Buying diet-supplement stocks based on a tweet or blog post may not be the healthiest move for your portfolio.

Although marketers make investing “natural” health products sound like a can’t-miss proposition, a securities regulator warns that some nutraceutical stocks are being used as a cover for an old scam, the pump-and-dump.

Nutraceutical products include energy drinks, fortified foods and natural cures that marketers claim will boost people’s energy, extend their lives, help them shed weight or fight off colds. Some companies that sell nutraceuticals are legitimate, but others may consist of little more than a name, the Financial Industry Regulatory Authority warned.

Marketers try to unload bogus nutraceutical stocks through sales calls, tweets, blog posts and message boards, FINRA said.

The hype convinces naive investors to buy, which artificially pushes up the stock price. Then the marketers bail, selling off their shares at inflated prices and saddling investors with near-worthless stock.

The hype is dizzying. In one case, marketers claimed a company was positioned to grab 3 percent of the market within three years and generate $100 million in sales.

In reality, the company was strapped for cash and had no track record of sales, FINRA said.

Don’t get distracted by pumpedup marketing claims:

• Use FINRA’s BrokerCheck to see if the marketer is properly licensed. Or call the Ohio Department of Commerce’s Investor Protection Hotline at (877) 683-7841.

• Check investor.gov to see that the investment itself is registered with the Securities and Exchange Commission. The SEC’s investor line is (800) 732-0330.

• Before you invest in a wonder cure, check the Food and Drug Administration’s consumer site, www.fda.gov /ForConsumers/ default.htm

If you search a type of drug through that site, you’ll get links to warning letters and other information that will give you a good sense of the sort of claims that get companies in trouble.