Stock follies: What happens when investors get duped or make mistakes?

THE SACRAMENTO BEENovember 12, 2013 

It may have one of the biggest bloopers in the stock market this year.

In October, when Twitter Inc. announced its impending IPO, thousands of eager stock buyers raced to be the first to invest.

Unfortunately, they swooped in a tad too quickly. Instead of buying Twitter shares, those investors wound up purchasing thousands of shares of a bankrupt electronics company, Tweeter Home Entertainment Inc. Twitter’s stock debuted Nov. 7 on the New York Stock Exchange, using the ticker symbol TWTR.

The Tweeter mix-up is not the only example of investor folly tied to news events, say securities regulators.

“Twitter was the biggest reason we’re alerting investors, but we’ve seen other circumstances where investors buy large quantities of bankrupt companies,” says Gerri Walsh, vice president for investor education at the Financial Industry Regulatory Authority, or FINRA, which oversees the securities industry. “It doesn’t happen every day, but it does happen when there’s big news about a company or an IPO.”

News events can shake, rattle and roll investors, both those who make their own mistakes or those who fall victim to scam artists.

Currently, there’s also a buzz connected to another source of potential stock scams: legal marijuana. Now that 20 states allow medical marijuana and two — Colorado and Washington — have legalized recreational use, FINRA is warning consumers about scams involving cannabis-related stocks.

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