The US Securities and Exchange Commission (SEC) has issued an Investor Alert on Celebrity Endorsements underlying that “it is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.”
The Alert has been issued from SEC’s Office of Investor Education and Advocacy (OIEA), and it is full of common-sense statements, hinting on the recent Initial Coin Offering (ICO) craze:
“Celebrities, from movie stars to professional athletes, can be found on TV, radio, and social media endorsing a wide variety of products and services,” the post says, “sometimes even including investment opportunities.”
The text goes on echoing recent ICO endorsements by Floyd Mayweather and other celebrities:
“But a celebrity endorsement does not mean that investment is legitimate or that it is appropriate for all investors,” the statement reads.
SEC notes that:
“Celebrities like anyone else, can be lured into participating (even unknowingly) in a fraudulent scheme.”
“Also, celebrities are sometimes linked to products or services without their consent so the celebrity may not even have endorsed the investment,” the Commission continues.
SEC lists three steps investors should take before investing:
- Check out “the background … through the SEC’s Investment Adviser Public Disclosure (IAPD) database,”
- Read “any prospectus and the company’s latest financial reports,”
- Consider “the investment’s potential costs and fees, risks, and benefits,”