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investor protection guide

Investor Protection Guide: Advance Fee Fraud

Advance fee frauds involve victims paying money in the hope of receiving something of greater value. This type of fraud takes on a myriad of forms, but they share some characteristics in common. Defrauders will often reach out to an investor and offer to pay an exorbitant price for securities owned by the investor, even if these securities are nearly worthless. The investor is sometimes referred to a fake website that the defrauder uses to bui

Investor Protection Guide: Affinity Fraud

Affinity fraud is not a singular specific type of fraud but is rather defined as any and all frauds targeted towards members of an identifiable group of individuals such as those with a common religion, ethnic heritage, background, or interests. The perpetrators of affinity fraud may pretend or may be members of the targeted group. They exploit the groups' inherent common trust to recruit victims for a fraud.

Investor Protection Guide: Equity-Indexed Annuities

An Equity-Indexed Annuity (“EIA”) is a financial product from insurance agencies that offers a minimum guaranteed return combined with a return linked to a market index. EIAs involve an “accumulation period,” when an investor makes a lump sum payment or a series of payments to the insurer, and a period following the accumulation period when the insurer makes a lump sum payment or a series of payments to the investor.   

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.  

Investor Protection Guide: Investment Newsletters

Some companies pay people to write online newsletters recommending their stocks, which are referred to as investment newsletters. Federal securities laws require the newsletters to disclose who paid for their product, the amount, and the type of payment.

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.

Investor Protection Guide: Misleading Senior Designations

Financial advisors may be designated “senior specialists” in order to imply a certain level of training and expertise regarding issues of importance to senior citizens. The Consumer Financial Protection Bureau (CFPB) reports that there are currently more than 50 such “senior designations” or “titles” being used by financial advisors, which is “extremely confusing” for consumers. A full copy of the CFPB report can be read at consumerfinance.gov.

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