Investors Warned of Storm Scams

Federal and state regulators Thursday warned investors to beware of “opportunistic investment scams” in the wake of Hurricane Katrina.

The North American Securities Administrators Assn., which represents state securities regulators, urged investors to be on guard against investments that promise profits from hurricane relief and recovery efforts in Louisiana, Mississippi, Alabama and Florida.

Oil and gas deals and investments in water purification technology and energy generating devices also should raise red flags, said Franklin Widmann, the group’s president.

Widmann, who is chief of the New Jersey Bureau of Securities, told investors to beware of cold calls, advertisements and Internet postings that tout potential gains from hurricane cleanup.

He recommends investors use the securities group’s website, at www.nasaa.org, to contact their state securities regulator and check that the seller and the investment are licensed and registered.

Federal regulators also are on the lookout for “financial parasites who feast on human suffering,” said Securities and Exchange Commission spokesman John Nester.

Pitches for biohazard and terrorism-related stocks emerged after the terrorist attacks of Sept. 11, 2001. Now, just days after Katrina pounded the Gulf Coast, the SEC is hearing about dubious hurricane-related investments, including get-rich oil and gas schemes.

Nester said such pitches always promised sky-high returns with little or no risk. Demands for rapid investments in obscure, thinly traded companies are another red flag, according to regulators.