How To Avoid Being One Of The 30 Million Victims Of Investment Fraud

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How To Avoid Being One Of The 30 Million Victims Of Investment Fraud


Investment – Are You At Risk?

By Alisa Bashaw Published: 11:35 GMT, 1st November, 2014

Investment fraud, or as it is also known as securities fraud or fraud, is the practice of getting investors to purchase or sell stocks or commodities on the basis of false information usually resulting in losses. This is in violation of securities laws. In Hollywood, many movies glorify investment fraud. Movies like “Wolf Of Wall Street”, “Boiler Room” and “Wall Street are a few, however there are real victims that lose their entire life savings to real crooks in the world every day. Many people watch these movies and wrongly think that they would never fall for one of those scams.

Thirty million consumers fall victim to investment fraud every year with the average loss being around $15,000 and retirees are the number one target. The one that coined the term Ponzi scheme was Charles Ponzi (Securities Exchange Company) which cost his victims $20 million dollars in 1920.

Other well known investment fraud cases over the years have been Bernard Ebbers (WorldComm) 2005 cost his investors $100 billion dollars, Jordan Belfort (Stratton Oakmont) cost investors $200 million “Wolf of Wall Street”, Kenneth Lay and Jeffery Skilling (Enron) 2001 loss of $24 billion to investors, and finally the most recent Bernie Madoff (Bernard L. Madoff Investments Securities LLC) investors loss an estimated $65 billion.

Consumers do not have to fall victim to this . There are simple key things to remember that can protect you, your and your future.

If it’s too good to be true, it probably is

The old saying is no more potent than in this situation. Any time you hear someone promising that an investment will do “huge returns” or claims that the stock has “no risk” warning bells and red flags should immediately go off. No stock or investment is risk proof. Anyone that makes claims like these are most certainly committing investment fraud.

Be careful whom you trust

You’ve worked hard for your money and to provide for yourself and your family. You should not let anyone take that away from you, despite the fancy suits they may wear, the car they may drive, or the names they may throw around. Routinely, family members are turned onto an investment by other family members who have also invested. Even though they may mean well, you need to do your due diligence as it is your money and future you would be investing.


 “LOVE ALL TRUST FEW ~William Shakespeare”

Ask questions

A real broker will welcome questions and will answer them honestly. A con artist will deflect them and will make you feel stupid for asking them, therefore shutting you down from asking anymore. Remember they need you, you do not need them. Playing the stock market is like playing the lottery. It is a gamble. It is NOT a sure thing. The con in con artist means confidence. That person is there to gain your confidence and to make you trust that everything they are telling you is the truth. A real investment broker will break down terms into easy to understand language. A con artist will use elaborate hard to understand terminology to confuse you and therefore discourage you from asking questions for fear you will sound stupid. Ask questions, it is after all your money.

Watch for Red Flag Terminology

Anytime you see or hear the following terminology you are most certainly dealing with investment fraud.

  • Limited Offer – anything that is here today will be here tomorrow
  • Guarantee – nothing is guaranteed in the stock market
  • High return – no such thing
  • As safe as a CD – only a CD is as safe as a CD
  • No Risk – same thing as a guarantee there is always a risk
  • Everyone is buying it – If everyone was buying it then they wouldn’t need your money


Any time that a salesperson is pressuring you to make a decision right then and there without giving you an option to think about it, you should immediately put your guard up. Legitimate stock brokers understand that people need time to make rational decisions about their stock portfolio. Investment scams will try to pressure you in order to get to your money faster. If they try to pressure you into writing false information on your account form they are probably involved in investment fraud and you should walk away from the deal. It may be tempting to try to make a little money in these deals, but many retirees have lost their life savings because they were pressured into investing their entire funds.

There are thousands of legitimate, well known investment companies in the market today, but every year the number of illegal and fraudulent investment firms goes up. According to the FBI, securities and commodities fraud has increased 52% since 2008. This means that you have to be your own advocate against these predators. If you take your time, do your research and ask questions you can’t go wrong. Money is one of the hardest things to come by and the thing everyone is chasing after. So, you should guard yours closey.


By |October 28th, 2014|Categories: Investing|Tags: , , , , , |1 Comment

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One Comment

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