Con artists often disguise themselves as “investment advisers”
and professional sales representatives in order to solicit investments
from unsuspecting people. A good way to avoid being conned by a fake is
to follow these five investment Do’s and Don’ts:
Don’t trust anyone who contacts you first. It’s easy for a con artist
to purchase a list of names and then contact everyone on the list via
telephone, email, or the Internet claiming to have insight into the “next
big investment.” If you didn’t initiate contact, it’s
a fair bet that the “adviser” is a fraud.
Don’t trust anyone pushing a “once in a lifetime investment opportunity”
that will disappear if you don’t act fast. High-pressure sales tactics
are a common sign of investment fraud. If an investment adviser –
even one you believe to be legitimate – doesn’t want you to
spend time investigating the investment, you may want to consider that
the “opportunity” doesn’t actually exist.
Don’t trust anyone who says you can get high rates of return with little to no
risk. In the world of investments, a high yield product is going to carry
higher risk. Anyone who says otherwise is conning you.
Do conduct a background check on all potential advisers through your state
regulatory agency. If you see any signs of noncompliance or investor complaints
in the adviser’s background, or if the adviser isn’t registered,
you may want to consider placing your business – and your money
Do understand the investment strategy of any security you invest in. If it’s
too complex or complicated for you to understand, or if the adviser doesn’t
want to answer your questions or tells you its “too difficult to
explain,” the investment is very likely a fraud.