Investment fraud is on the rise. It comes in the form of a call or email with enticements of doubling or tripling money in a short time by investing or purchasing shares in a company whose stock price is bound to rise significantly. These opportunities sound too good to be true, and they are. According to the North American Securities Administrators Association, fraud drains billions of dollars from investors each year. Fraudsters now have more ways to reach people to talk them into handing over their money such as social media, email, and television.
According to regulators, law enforcement, and advocacy groups, investment criminals typically target older people who tend to be more trusting and have more assets. However, anyone can fall prey to false investment scams. The good news is that there are some basic measures to take that can reduce the chance of becoming a victim.
Be aware of:
▪ Anyone pressing for money to be sent right away for a supposed once-in-a-lifetime or exclusive opportunity.
▪ Claims such as "breakout stock pick", "incredible gains", or "almost no risk!" These types of assertions suggest possible fraud, says the U.S. Securities and Exchange Commission (SEC).
▪ Advice of offshore or foreign investments from someone you do not know and trust. The SEC cautions that it is more difficult to control assets once it is in another country.
What to do:
▪ Ask questions before making any investments such as, "Is the financial product registered with state securities agencies or the SEC?", "How does the investment company make money?", "What are the fees?", and "What can affect the value of the investment?"
▪ Look up the company handling the investment in BrokerCheck. BrokerCheck is an online database maintained by the Financial Industry Regulatory Authority (FINRA), a nongovernmental group that watches over securities dealers and firms.
▪ FINRA officers and employees do not offer investment guarantees. Do not believe someone claiming to represent FINRA offering this type of information.
▪ Look up information about publicly traded companies in the SEC's EDGAR database.
▪ Be wary of free investment seminars.
▪ Do not make investment decisions based on solicitations, commercials, social media, or the look of a company's website.
Comments