It may have one of the biggest bloopers in the stock market this year.
In October, when Twitter 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. Twitter's stock didn't debut until last week 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 recent 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," said 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."
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, the regulatory authority is warning consumers about scams involving cannabis-related stocks.
"When the next big thing is in the news," said Walsh, "fraudsters start swimming like sharks." And with more than 20,000 companies listed on U.S. stock exchanges, investors have plenty of opportunities to either fumble or be defrauded.
Here's how to avoid those mistakes:
Check the symbols: Most U.S. stocks have three- or four-letter ticker symbols, some of which can sound confusingly similar. Check the symbols carefully, especially if it ends in the letter "Q."
When a company enters bankruptcy, a "Q" is often added to its ticker symbol. That's your tip-off that the stock is risky.
Ask 'why me?': Prior to a company going public and actually issuing shares, scam artists may try to entice unsuspecting investors into "exclusive," pre-IPO offers that supposedly no one else can obtain. These come-ons can arrive by phone, email and tweets, or online via social media sites or investing blogs.
"When somebody comes to you with a deal, you need to ask some hard-hitting questions: Why me? Why would they give me this opportunity?" Walsh said, especially when the offers are unsolicited.
Check the licensing: "So often, the frauds we see are unregistered professionals selling unregistered securities," said Walsh. Use FINRA's Broker Check, at http://brokercheck.finra.org, to be sure the investment broker is registered and doesn't have a serious complaint history.
If it's an IPO, check that it's registered with the Securities and Exchange Commission.
Know where it trades: If a company is listed on the NYSE or Nasdaq, there are certain standards of financial soundness that must be met in order to be listed.
Do your research: Check the SEC's EDGAR database to get details on a company's revenue, growth projections and history. Read the company's prospectus. Remember that just because a company has registered with the SEC does not mean it's necessarily a good investment.