The SEC’s Office of Investor Education and Advocacy, the Commodity Futures Trading Commission (CFTC), the Financial Industry Regulatory Authority (FINRA), the National Futures Association (NFA) and the North American Securities Administrators Association (NASAA) publish this bulletin for investors. to highlight some key topics from World Investor Week 2021, a global campaign to raise awareness of the importance of investor education and protection. From October 4-10, 2021, investors, investment professionals, teachers, parents, researchers and others are encouraged to make a special effort to promote investor education. Here are some current key topics we are seeing for Main Street investors in the United States.
Environmental, social and governance (ESG) investment
ESG investing has grown in popularity with investors over time. Investors can hear about ESG investing from financial professionals, online investing-focused sites, or even popular media. “ESG” stands for environmental, social and governance. It is often also called sustainable investing, socially responsible investing and impact investing. ESG investing is a way to invest in companies based on their commitment to one or more ESG factors.
The environmental factor can focus on the impact of a business on the environment or on the risks and opportunities associated with the impacts of climate change on the business, its business and its industry.
The social factor can focus on the company’s relationship with people and society, or whether the company invests in its community.
The governance factor can focus on issues such as how the business is run and executive compensation.
Different investments can weight environmental, social and governance factors differently and can also focus on different specific criteria within a factor. Investments that do not have “ESG” in their name can still incorporate ESG investment elements into their portfolios. For more information on mutual funds and exchange-traded funds that use an ESG investment strategy, see Environmental, Social and Governance (ESG) Funds – Investor Bulletin.
Video: What is ESG investing?
Digital assets are part of a new and evolving financial technology ecosystem that includes virtual currencies, smart contracts, and applications that can leverage distributed ledger or “blockchain” networks. Digital assets can take many forms and can represent a physical asset, a virtual asset, a security and / or a right. Depending on the facts and circumstances, including how they are structured, digital assets can be securities, cash commodities, or derivatives.
New projects, coins and tokens are created every day and posted on social media, discussion forums, and messaging apps. Unfortunately, many investors have lost money because projects fail, get hacked, or were created to defraud investors. Additionally, scammers use social media, messaging platforms, and even dating sites to convince investors to send them digital assets to trade. Investors have also been drawn to trading websites designed to steal their money.
Investors should fully understand the technology behind a project, token, or coin, as well as the risks of investing before committing any money. Digital assets can be very volatile and lightly traded, making them easier to manipulate. Investors should only entrust their money to registered financial professionals. If people offer to trade for you, check to see if they are registered with the NFA, SEC, or FINRA. Visit the CFTC’s Customer Resources for Digital Assets and Spotlight on Initial Coin Offerings and Digital Assets to learn more.
Day traders buy, sell, and short sell stocks, options, or futures throughout the day in the hope that their positions will increase in value for the seconds or minutes they hold the stocks or contracts, which allows them to make quick profits. Retail investors may seek to profit from volatile markets by purchasing commodity futures, options, or individual stocks, including stocks of heavily promoted companies with smaller market capitalizations. Day trading is extremely risky and can lead to substantial financial losses in a very short period of time. The leverage created by futures, margin loans or options can magnify risks.
Sometimes the stocks, options or products targeted by day traders can be discussed in social media, news aggregators, investment research websites, online newsletters, rating websites, message boards, discussion forums and discussion forums. It can be tempting to jump on the bandwagon and follow what the crowds seem to be doing. Sometimes, however, following the crowd can result in significant investment losses. For more information on these important risks and tips for long-term investing, see Investor Alert: Thinking of Investing in the Latest Trending Stocks? Understand the important risks of short-term social media trading; or Customer Opinion: Understand the risks and markets before reacting to the Internet hype. For more information on the rules that apply to people who engage in day trading, read Am I a Pattern Day Trader? and the margin rules for day trading.
Video: What is Day Trading?
“SPAC” means ad hoc acquisition company, and it’s a type of blank check company. SPACs have become a popular vehicle for the transition of a business from a private company to a publicly traded company. Some market participants believe that by going public through a PSPC transaction, a private company can become a publicly traded company with more certainty about pricing and controlling trading conditions compared to initial public offerings. traditional, or IPOs.
These types of transactions, in which a SPAC acquires or merges with a private company, occur after, often several months or more than a year, after the SPAC has completed its own IPO. Unlike an operating company that goes public through a traditional IPO, however, an SPAC is a shell company when it goes public. This means that it has no underlying operational activity and has no assets other than cash and limited investments, including the proceeds of the IPO. For more information on investing in SPAC, see What you need to know about SPAC – Updated Investor Bulletin.
Video: What is a PSPC?
Avoiding Brokerage Impostor Scams
While investment scams are certainly not new, new variations are popping up almost every day. Over the past year, securities regulators have observed an increase in incidents related to cybercrime, including fraudsters setting up fake websites using the names and business contact details of real industry professionals (who don’t have no connection with impostor sites). Identity theft is one of the oldest scams out there, but it can be hard to spot unless you know what you’re looking for. Beyond typical errors, such as bad grammar, spelling mistakes, weird or clunky wording, or misuse of investor terminology, the use of a registered representative’s name as a domain name for the website (for example, firstnamesecondnamename.com). In July 2021, the FBI and the Securities and Exchange Commission issued a warning to investors regarding this issue, and FINRA provided additional guidance to help investors spot fakes on Watch out for broker impostor scams.
If you have any questions about your investments or your investment professional, you can call the SEC Investor Hotline (800) 732-0330. You can also to report a problem concerning your investments or report possible securities fraud to the SEC, or by sending an email [email protected]. follow us on Twitter and Facebook and sign up for updates on investment topics and news.
CFTC: Article: Don’t be re-victimized by debt collection fraud
CFTC: Article: 6 steps to follow after discovering a fraud
FINRA: Take a Smart Investing Course, a series of six quick mini-modules to help investors acquire essential investing knowledge and skills
Fundamentals of Futures
This Investor Bulletin represents the views of staff in the Office of Investor Education and Advocacy. This is not a rule, regulation or statement of the Securities and Exchange Commission (“Commission”). The Commission neither approved nor disapproved of its content. This Bulletin, like all staff directives, has no legal force or effect: it does not modify or modify applicable law, and it does not create any new or additional obligations on anyone.
CFTC – United States Commodity Futures Trading Commission published this content on 05 October 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on 05 October 2021 13:58:01 UTC.