Educate yourself about common types of investment fraud and what to do if you suspect investment fraud.
Warning Signs of Investment Fraud
High Pressure Sales Tactics
Beware of sales pitches, whether from individuals or in ads, that urge you to get in on the ground floor or to act at once. Avoid being pressured to make a quick purchase at a “low, low price,” to buy now because “tomorrow will be too late,” or overreact to being told “don’t be a fool,” or “when this becomes public knowledge people will be lined up to take advantage of this golden opportunity.” Shady promoters may even offer to have an express delivery service pick up your check. They don’t want you to take time to think, read the small print, or talk to others.
Promises of Exorbitant Profits
No honest investments and business is built on quick astronomical profits. If it sounds too good to be true it probably is.
Claims of No Risk and Minimal Risk
Return on investment is guaranteed. Assurances that “you can’t go wrong” are a sure tip that you are being conned.
Not Answering Questions or Allowing You to Ask Questions
Con artists don’t want you to ask questions. Instead, they will answer by asking you questions. These are usually ones intended to get a positive response. “You would like to make more money, wouldn’t you?” Reputable investment professionals encourage you to ask questions. Con artists don’t want you to.
Evasive Answers and Lack of Communication
A promoter’s failure to provide details and a disclosure document or to respond directly to inquiries should diminish your enthusiasm. He or she is probably hiding something.
Claims that the Investment Doesn’t Have to be Registered
Most investments available to the general public must be registered with the Securities Division of the Washington State Department of Financial Institutions.
Avoid Any Investment that isn’t Clearly Described in Detail, Without Hedging
Swindlers often declare that the specifics are “too technical” to describe in layman’s terms or that the information is “classified” or “confidential.” Don’t buy it. A prospectus must accompany all investments. If it is that complicated, you probably don’t want to be involved.
Unprofessional Businesslike Conduct
They refuse to return phone calls, answer correspondence, or give out their phone number and physical address. Callers can only get an answering machine. They always want to meet you someplace other than their offices. These are all warning signs of fraud. There are, however, con artists who have fancy offices, cars, and professional receptionists. If they weren’t slick, they wouldn’t stay in business very long.
Promises of Inside Information
Never buy on the basis of rumors or hot tips. And acting on insider information is illegal and could land you in lots of trouble. Always rely on fact rather than emotion. If the urge gets too strong, call your broker and ask for a research paper on the security you have in mind.
How To Report Investments Fraud
Document Everything
Document every phone conversation listing time date with whom you spoke and the items discussed. It is also a good idea to documents every time you spoke to an answering machine and support person.
Keep copies of all correspondence and give them specific time frames for actions.
Contact the Washington State Departments of Financial Institutions.
If you are unable to reach an agreement with the company contact the Washington State Departments of Financial Institutions by calling 360-902-8700 or 1-877-RING DFI 746-4334 to file a complaint.
What To Do If You Have Problems With Your Investment Professional
Most dealings with investment professionals are straightforward and trouble free. Provided the investment was appropriate for you, was presented to you fairly, and purchased by you knowing the risks involved, you cannot blame your investment professional if it is not as successful as you hoped.
However, sometimes problems do arise. Here are some steps to take to protect yourself.
What To Do
Keep a diary of all phone calls and contacts with your investment professional. Just simple notations of date, time, and basic content is fine.
Keep an investment notebook with all account statements.
Read and understand all account statements. If you don’t understand something, or it is inconsistent with your investment strategy, call immediately. Don’t delay.
Make sure nothing happens in your account without your prior authorization.
Put incoming and outgoing correspondence between you and your investment professional in your investment notebook.
Read and understand all correspondence from your investment professional or his/her firm. If you don’t understand something, call immediately and check it out. Don’t wait!
If you receive a confirmation from your investment professional of stock trades you do not recall authorizing, call immediately.
FAQs
What does investment fraud mean?
Investment fraud is a scam in which people are tricked into the investing their money in fraudulent or deceptive schemes.
What are the red flags of investment frauds?
High pressure sales guaranteed returns or unlicensed advisers and offers that seem too good to be true.
What if I think I’ve been the victim of investment fraud?
Cease sending money keep all records and report the scam to the relevant authorities.
What should i do if I suspect investment fraud?
Stop sending money or save all records, and report the scam to the relevant authorities.
Can I recover money lost to investment fraud?
Recovery is possible in some cases if the fraud is reported quickly to your bank and authorities.
