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Top 10 Warning Signs of Investment Fraud

How Investors Can Protect Themselves and Their Money

Investment fraud is prevalent in the United States and around the world. Scammers have targeted even the most sophisticated investors, promising high returns with little-to-no risk. To protect your investment, you should be on the lookout for fraudulent schemes and scams and report any suspicious activity to the appropriate authorities.

At Meyer Wilson, we provide dedicated representation to individuals who have been the victim of investment fraud and stockbroker misconduct. Our nationally-recognized legal team has handled over a thousand investor claim cases, recovering over $350 million on behalf of harmed investors.

If you have suffered investment losses, contact our office at (866) 827-6537 to have your case reviewed by an experienced attorney. 

Investment Fraud Red Flags

Fraudsters use a number of tactics to manipulate investors. Educating yourself about common red flags can help protect your assets and prevent bad actors from stealing your investment.

Be aware of these top 10 investment fraud warning signs:

  1. “Risk-Free” Opportunities

Nothing is without risk. As noted by the Financial Industry Regulatory Authority (FINRA), all investments carry some degree of risk. If an investment is described as risk-free or carries little-to-no risk, it may not be worth investing.

  1. Promises of Guaranteed Returns

If it sounds too good to be true, it probably is. A “guaranteed” investment should certainly be considered a red flag. There are no guarantees, as all investments can carry some risk. Be wary of “high yield investments” or when an investment is described as having a “high return with low risk.”

  1. High-Pressure Sales Tactics

It is not unusual for a bad actor to use high-pressure sales tactics to get you to invest in a scam. The person may make claims that they received a “hot tip” or are privy to “insider information.” All of these phrases should alarm you as an investor.

You should never feel pressured into investing. If a person is overly aggressive or demands that you act now, they may be pushing a scheme that they know is fraudulent.

  1. Unlicensed Professional

You should always check whether the person trying to sell you the investment is licensed. Registered representatives are required to be licensed with FINRA or through the U.S. Securities and Exchange Commission (SEC). Both agencies offer ways to verify whether a person has the appropriate licensing. You can also check with your state securities regulator.

Never purchase an investment from someone who is not licensed. You can check whether a financial professional is registered through FINRA BrokerCheck or look up an investment adviser on the SEC’s Investment Adviser Public Disclosure website.

  1. Unregistered Securities

Unregistered securities should also raise concerns. This may include stocks without a stock symbol or products where the underlying asset is unclear or undisclosed.

Investment fraud is widespread; doing your own research and due diligence can help you avoid suffering losses.

  1. Lack of Communication

The promoter of an investment should be ready and willing to share information about the product. A lack of communication, unanswered questions, or the hint of evasiveness are all problematic. You should not feel confused about your investment. Fraudsters often count on an investor’s lack of sophistication or knowledge.

  1. Short on Details

Any investment that is not clearly described should be avoided. A person trying to convince you to invest in a scam may tell you that the details of the product are very technical or complicated. Any investment that relies on a complex strategy likely comes with high risk. Always ask for documentation and clarity about the actual investment.

  1. The Source of the Opportunity

How did you learn about the opportunity? Was it from an “investment seminar” or an unsolicited email? Did you receive a cold call or materials sent in the mail? Many of these sources offer misleading information that lacks crucial details. Only invest with registered representatives that offer clear-cut information about the investment opportunity.

  1. Limited Time Offers

A clear indication that something may be a scam is if it is sold as a “limited time offer.” Bad actors may try to convince you that there are only a few investments left. Do not be lured with this false sense of urgency.

10. Other Investors

Finally, be aware that fraudsters may try to use peer pressure to get you to buy into the scam. They may tell you that “everyone is buying it” or even that friends and family have already invested.

Do not solely rely on what a promoter is telling you. Do independent research on the investment to determine whether it is a good fit for you and your portfolio.

Recovering Losses After Fraud

If you suspect that you suffered losses due to investment fraud, contact our office at (866) 827-6537. All consultations are free and without obligation to retain our services. We accept investor claims on a contingency fee basis, meaning you do not pay our firm fees unless we recover losses on your behalf.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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