The U.S. Securities and Exchange Commission (SEC) has reported more complaints and tips involving investment scams, and they urge investors to be on high alert to stay protected against fraudsters. The SEC’s theory is that scammers may be using the COVID-19 pandemic to prey on vulnerable or isolated individuals who may be fearing their financial future. Here’s what every investor needs to know.
Ponzi schemes are designed to pay existing investors with funds contributed by new investors. The biggest red flag of a Ponzi scheme is the promise of high returns with little to no risk involved. Other warning signs include:
Certificates of Deposit (CDs) may be a sound investment for those investors who want to have a stable, fixed-rate return during market instability. While this may be a sound way to protect your money, it’s critical to understand that there are “spoof” sites mimicking legitimate financial institutions offering fake CDs. Here are some red flags to watch out for:
Affinity fraud is a practice where scammers pretend to be members of a specific group such as the elderly, religious, or ethnic communities. They may “recruit” a respected leader from the group to relay information about a scheme to convince other members that the “deal” is legitimate. Affinity scams commonly involve Ponzi or pyramid schemes.
When vulnerable individuals are lured into an investment scam, or their broker takes advantage of trust, the consequences can be devastating financial losses. When your future is at stake, and you don’t know where to turn, we are here to fight for you. Our team of attorneys at Meyer Wilson is here to help you hold financial institutions and brokers accountable for their negligent actions and recover your losses.