That Nigerian official doesn’t need your help getting money out of the country, you don’t have a long-lost uncle that left you millions in a Malaysian bank and money still doesn’t grow on trees. Securities fraud, or investment fraud, is a nonstop problem and thanks to email, we’re bombarded by it every day.
Special thanks to my most recent spammer for inspiration:
Current Price: .01
Short Term Price – .70
Don’t Miss: A corporation Made for Advancement along with gigantic potential!!!
E-Commerce will be definitely growing increasingly popular and also the use with Internet video is definitely flourishing together with it. The company is the Web’s newest manifestation to get enterprises along with possible purchasers for you to faultlessly be connected via movie, is going to stimulate re-homing of the company’s technologies by way of a variety of advertising and marketing paths plus boost model awareness through on the web procedures like search engine optimisation of the company’s internet site, popular advertising, Google, in addition to cross-promotions with other google in addition to online video programs.
This is the abridged version with ticker and company name removed, but this penny stock pump and dump scheme went on for another 300 words of promotional nonsense. It’s a perfect example of securities fraud.
These emails aren’t the only way to get fleeced, just ask the Madoff victims. Lets be honest, people fall for scams all the time. They tug at our heart-strings or play on our greed with promises of a richer, better life.
It would be easy if there was just one or two to watch out for, but there’s not. People fall prey to investment scams, Ponzi schemes, pyramid schemes, IPO scams, and emails like the one above all the time. And those are just securities fraud. Add in internet fraud, con artists, the list goes on and on and on.
Fraud Reg Flags
The best way to protect yourself, is to be aware of the warning signs and be skeptical. Here’s several securities fraud red flags to watch out for:
- Guaranteed or Risk Free Returns – guarantees are great for insurance and warranties, not investments. Every investment has some risk. The higher the return, the more risk you take.
- Easy Money or Quick Profits – if it was easy money, everyone would be doing it and we’d all be rich. Successful investing takes time, research and work. It’s far from easy money.
- Need the money RIGHT NOW – it’s easy to fold under a high pressure sales technique, but for a once in a lifetime offer, there certainly seems to be a lot of them. Guess it’s just not as rare as it sounds. Always take the time to research.
- Advanced Fees – you have to pay just to get access to that once in a lifetime information. This is often seen with loan fraud and other online schemes.
- Off-Shore or Foreign Investments – it’s usually pushed as a way to avoid taxes. Not all foreign investments are suspect, but they don’t have the same regulatory scrutiny as those in the U.S. It may not be securities fraud, but you should be cautious with any foreign investment. Just look at the recent accounting fraud in several Chinese stocks.
- Too Complicated to Explain – ask the person to explain the investment in terms you can understand. Then do the research on it. Any investment professional worth their weight in salt will take as much time as necessary to make sure you understand everything about an investment. Including the upside and downside. A good rule of thumb, don’t invest in things you don’t understand.
- Typos, Misspellings, and Bad Punctuation – this is where those grade school English lessons and spelling bees finally pay off.
- Cold Calls – those annoying calls at dinner. I don’t know about you, but a random person calling me out of the blue offering a guaranteed, risk free, once in a lifetime opportunity to double my money quick, sounds fishy. Adding your phone number to the National Do Not Call Registry is a start. Hanging up works too.
If it sounds too good to be true, guess what, there’s a 99.99% chance it is. The other 0.01% of the time, the person explaining it hasn’t gotten to the downsides yet. If they claim there’s no way you can lose money, just walk away.
As much as I want to think I have all the answers, I don’t. It’s best to turn to the professionals when it comes to securities fraud. The SEC and FINRA are two great resources you can use to research securities, professionals and just stay on top of news and information.
I discussed doing research when you search for a financial advisor. That goes for any investment professional. It only takes a couple of minutes to look someone up, make sure they are licensed, and check for any history of complaints or regulatory problems. You can use:
- FINRA’s BrokerCheck
- SEC’s Investment Advisor Search to check firms and people
- NAIC (National Association of Insurance Commissioners) to check insurance agent licenses
- NASAA (North American Securities Administrators Association) to check through state regulators
Next, double-check the investment with the SEC’s EDGAR Database. If the investment is registered it will be there, along with financial statements and other required filings. This won’t guarantee it’s a good investment, only that regular financial statements, filings and other information are released to the public.
For more information on all kinds of fraud, including securities fraud, check out StopFraud.gov.