Securities Fraud
Representing investors harmed by fraud, misconduct, and deceptive practices.
Overview
How to Avoid Being the Victim of Securities Fraud
Investment fraud schemes are estimated to cost US investors tens of billions of dollars per year. There are many forms of investment fraud — Ponzi schemes, promissory note fraud, romance fraud, real estate investment fraud, and other types of investment scams.
Although it helps to know the different types of fraud that exist, it is far easier to recognize the red flags that virtually all investment scams share.
Red Flags & Warning Signs
Promises of Consistent High Returns
Any investment that promises consistent high returns has strong chances of being a scam. No investment can offer guaranteed high returns — the very nature of investing is that there is some risk involved.
Unregistered Advisers
If your financial adviser or broker is not registered with the SEC or FINRA, stay away from any investments they recommend. Deal only with SEC/FINRA registered and licensed advisers.
Lack of Background Checking
Only 1 in 3 investors checks the background of their financial adviser. Check any adviser's registration status and disciplinary history on FINRA's BrokerCheck website.
"Free Lunch" Seminars
People get invited to a free lunch or dinner and are then told about inappropriate investment opportunities. This tactic is so common it has been cited by the NASAA.
Requests for Power of Attorney
Anyone requesting power of attorney (POA) to invest should signal an enormous red flag. There is no reason to hand over POA to anyone to invest in something.
Overly Complex Investments
Fraudsters give the impression that details are "highly intricate" or that average investors couldn't possibly understand them. Under FINRA rules, your adviser must make investments understandable to you.
Overly Consistent Returns
Investments go up and down with market fluctuations. If an investment never seems to suffer a dip, it is probably fraudulent.
Lack of Transparency
Financial advisers are obliged to provide full information regarding your money and investments. Ambiguous answers often signal a fraudulent investment.
High-Pressure Sales
There should never be any pressure to invest in anything. Hard sell techniques and high-pressure sales methods are often a sign of a fraudulent investment.
If you have been caught by an investment scam, the attorneys at MDF Law are very interested in hearing about it. Contact us to let us know about your case — the consultation is free and confidential.
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