The Ultimate Guide To Identify And Prevent Securities Fraud

Do you consider yourself an investor? Whether you've sunk money into stocks, a business, or some other type of (hopefully) moneymaking opportunity, as an investor, you must always be alert. The smart investor does all they can to prevent securities fraud and watch out for scammers. At all times you must protect yourself and be prepared. Fraudsters most often exhibit telltale signs of being less than completely legitimate. To help individuals avoid investment scams, we're going to offer some tips and suggestions.

Educating Yourself Regarding Fraud

Keep the following in mind before agreeing to invest your money somewhere:

Always ask for information – Watch for fake documents used for the purpose of verifying the legitimacy of fraudsters. Almost everything can be faked in this day and age of advanced technology. Phony phone numbers, fake seals, bogus websites, and more are used by scammers every day.

Beware of mini-tender offers – Increasingly used to catch today's investors off guard are "offers for less". The offer of company stock under 5% should set off bells and whistles compared to larger traditional offers, these smaller offers typically don't provide the same procedural protections and disclosures.

Beware microcap company investments – Losses can be created for unsuspecting investors when microcap investments are offered. False information can be spread by scammers because it's hard to find reliable information about the smallest companies. These low-priced stocks are referred to as "microcap stocks".

Talk to an Advisor or a Broker

If you're already an investor, chances are you have an advisor or a broker. This is a good person to know and check with if you think an offer sounds a little too good to be true. Whenever possible, research an offer or investment opportunity. It's very easy to do online. Never simply go off the word of a friend, colleague, relative, etc. They may already have been scammed, and you don't need to join in.

A popular scheme/scam today is the pyramid scheme. Investors end up being tasked with bringing in more and more investors in the promise of bigger profits. All that's really happening is that more and more people are losing their money.

Demand to See Financial Statements

Always ask to see credentials and other confirming information. Be sure to go over any credentials that a presenter supplies you with carefully and completely. Everything should be checked over and verified. Practically any and every document today can be replicated by the truly experienced fraudster. Everything can be false, including emails, website addresses, caller IDs, etc.

A scammer will try to present themselves in the most professional and successful manner possible. Investment professionals who are on the up and up, however, must register with one or more of the following:

  • Your state insurance regulator
  • State securities
  • The Securities Exchange Commission

Common Schemes and Scams

The following are some of the more common scams and schemes taking place today:

  • Anonymous tips left on voicemails.
  • Internet fraud.
  • Pump and dump cons.
  • Foreign investor fleecing.
  • Promissory note fraud. Broken promises.
  • and many, many more

Weltz Law and Fiduciary Duty Breaches

At Weltz Law, we help people who have been victims of securities fraud and other scams and schemes. Should you feel that you're involved in some type of scam or fraudulent activity, contact one of our experts. If you have been scammed, we may be able to help you recover some or all of your losses.

Contact us today for a free consultation.