State Securities Regulators Remind Investors That Scams Often Hide Behind the Headlines

WASHINGTON, D.C. (January 28, 2008) – State securities regulators today reminded investors not to allow recent negative economic news and stock market volatility lead them into high-risk speculative investments, which may be nothing more than fraudulent schemes hiding behind today’s headlines.

“Scamsters follow the news and often prey on investors’ fear to promote bogus investments with promises of high return and little or no risk,” said NASAA President and North Dakota Securities Commissioner Karen Tyler.

Tyler also said investors nearing retirement are particularly at risk of being targeted by phony investment schemes promising high returns to make up for losses in retirement accounts. “We are concerned that investors may allow uncertainty over current market conditions to lead them into fraudulent investment schemes that could weaken or devastate their financial position, potentially wiping out the retirement security they worked so hard to build. A hasty decision often can make a bad situation worse.”

“Whether the markets are up or down, there are always those who will attempt to prey on the investing public,” Tyler said. “Investors should guard against high-pressure sales pitches for unregistered securities and non-traditional investments such as foreign currency, oil and gas investments, exotic financial products, or offers to send their money offshore to so-called ‘safe havens.’”

Tyler reminded investors to:

  • Hang up on aggressive cold callers and delete unsolicited e-mail messages promoting investments opportunities with little or no risk.
  • Contact their state or provincial securities regulator to check that both the seller and the investment are licensed and registered. If they aren’t, don’t invest. Contact information is available on the NASAA website here.
  • Request written information about any investment; carefully review it or ask your financial adviser to evaluate it.
  • Use common sense. Get-rich-quick promises are usually signs of investment fraud.
  • If you suspect you’ve been scammed, report it to your state or provincial securities regulator. Your call could help others from losing money.

Tyler also noted that legitimate financial professionals, if serving their client’s interests first, generally do not recommend changes to investment portfolios based on short term economic news and market volatility. “Investors, especially those nearing or in retirement, should view with great skepticism any recommendation to liquidate a well structured, diversified investment portfolio to fund the purchase of an alternative investment product that may expose them to high commissions, high fees, excessive complexity, and undue risk,” Tyler said.

NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the provinces and territories of Canada, and Mexico.

For more information:
Bob Webster, Director of Communications

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2008 Headlines, Newsroom