investor protection guide

Investor Protection Guide: Investment Newsletters

Companies may pay people to write online newsletters recommending the stocks of these companies. Federal securities laws require the newsletters to disclose who paid for their product, the amount, and the type of payment. Many fraudsters fail to do so and instead masquerade their newsletters as sources of unbiased information, when in fact they stand to profit if investors follow their advice and purchase or sell certain stocks.

Investor Protection Guide: Promissory Note Scam

In a promissory note scam, the individuals perpetrating the scam often stay behind the scenes. They persuade others to sell promissory notes by promising them large commissions. The individuals who sell the promissory notes to investors often rely on the information they have been given, and they may not know that the information is false or misleading. The individuals perpetrating the scam use a portion of the money they collect from investors to pay the sellers their commissions. The fraudsters typically abscond with the rest.

Investor Protection Guide: Viaticals

Viatical settlement is a method for an insured person with an abbreviated life expectancy to "cash out" of a life insurance policy before death. An investor would buy a life insurance policy of a terminally ill person at a price that is less than the death benefit of the policy. When the seller dies, the investor collects the death benefit. The return depends on the seller's life expectancy.

Investor Protection Guide: Systematic Investment Plan (SIP)

Systematic Investment Plans (SIP) are regulated as Periodic Investment Plans under the federal securities laws. The primary objective of a SIP is to enable investors to clearly define an investment goal and then to help them reach it. While the majority of these plans are sold to military personnel, they are also sold to civilians. These plans allow you to accumulate shares of a mutual fund indirectly by making small regular monthly payments, usually as little as $50, over a period of 10, 15 or 25 years. Individual plans can differ from one another.

Investor Protection Guide: Promissory Note Scam

In a promissory note scam, the individuals perpetrating the scam often stay behind the scenes. They persuade others to sell promissory notes by promising them large commissions. The individuals who sell the promissory notes to investors often rely on the information they have been given, and they may not know that the information is false or misleading. The individuals perpetrating the scam use a portion of the money they collect from investors to pay the sellers their commissions. The fraudsters typically abscond with the rest.

Investor Protection Guide: Prime Bank Schemes

Prime bank fraud is a type of investment scheme that promises extremely high yields over a short period of time. Individuals claim that they have access to secret financial products which they can buy at a discount and sell at a premium. In reality, these financial products are fictitious.  Individuals attempt to make these products seem legitimate by associating them with top world banks or secret government banking systems for the elite. Individuals seek to mislead investors into believing that well regarded financial institutions are associated with these financial products.

Investor Protection Guide: Misleading Senior Designations

Individuals may call themselves “senior specialists” to create a false level of comfort among seniors by implying a certain level of training on issues important to the elderly. However, the training they receive is often nothing more than marketing and selling techniques targeting the elderly. Bogus senior specialists commonly target senior investors through seminars where the specialist reviews seniors’ assets, including securities portfolios.

Investor Protection Guide: Investment Seminars ("Free Lunch")

Financial seminars are a marketing tool often used by broker-dealers and other entities to attract prospective clients. These seminars may be invitation-only or they may be advertised in local papers or on the internet. Financial seminars are often held at hotels or restaurants and may offer enticements such as free meals, books, or trips for attendees. At these seminars, participants are provided with a sales pitch and sales materials that describe possible investment strategies. These seminars sometimes offer unsuitable sales of securities for attendees.

Investor Protection Guide: Internet Fraud

The Internet can serve as an efficient tool for investors, but it is also an excellent tool for defrauders.  The Internet allows individuals or companies to reach tens of thousands of people by building a web site, posting a message on an online bulletin board, entering a discussion in a live chat room, or sending mass e-mails.  Because defrauders can easily make their information look real and credible, investors may have difficulty telling the difference between fact and fiction.  

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