Perhaps you think you’ve found an oil or gas investment that meets your dreams of “striking it rich.” Be careful. The Securities & Exchange Commission (SEC) warns that many deals are fraudulent with skilled telemarketers using high-pressure sales tactics to get you to part with your hard-earned money.
At Stateside we believe in honest, straightforward representation of opportunities in accordance with the highest possible standards of business ethics.
Be wary if you’re getting an aggressive sales pitch touting headline news about, for instance, volatile gas prices as a reason to “get in now.” Trustworthy companies don’t create a false sense of urgency.
Often you’ll be told that you’ll get a much higher return on your money than other investment opportunities. Compare the promise with the current return on popular stock indices. If it’s way over the top take the way out.
Act now—because the deal won’t be around tomorrow. Scammers create a fear of loss trying to manipulate you into investing immediately rather than taking the time to do proper due diligence. Don’t be rushed.
If you’re told an oil and gas investment is a “can’t fail” and guaranteed proposition you are being misled. Every investment carries some degree of risk. Stateside’s firm policy is to fully spell out the risks and potential rewards.
You might be bombarded with sales pitches by phone and email. You might even get slick, glossy, full-color brochures that look impressive and persuasive. Do yourself a favor: disregard and discard any unsolicited materials. Hang up on the phone on follow-up callers.
Listen, do you want to know a secret? Here’s a tip you need to act on now, but you can’t tell anyone else. Don’t fall for that one. You should always feel free to seek professional advice.
THINGS THEY SAY
The North American Securities Administrators Association provides this list of claims that unscrupulous promoters often make and warn potential investors to beware of the hype:
- You will have an interest in a well that cannot miss
- The risks are minimal
- A geologist has given the salesperson a tip
- The salesperson has personally invested in the venture
- The promoter has “hit” on every well drilled so far
- There has been a tremendous “discovery” in an adjacent field
- A large, reputable oil company is operating or planning to operate in the area
- Only a few interests remain to be sold and you should immediately send in your money in order to assure the purchase of an interest
- This is a special private deal open only to a lucky chosen few investors.
What’s the best way to avoid being scammed? The SEC says, “Fraudsters rely on the sad truth that many people simply don’t bother to investigate before they invest. Savvy investors take the time to do their own independent research.”
You may be able to verify information in offering materials by contacting the oil and gas regulatory agency in which the wells are allegedly being drilled. If you encounter a problem send your complaint to the SEC via their online complaint form at: www.sec.gov/complaint.shtml