What is true of all investments -- that the best protection against loss from fraud is to “investigate before you invest” -- is perhaps "truest" when it comes to international investment opportunities.

Complaints about overseas investment swindles involving precious metals, penny stocks, mining, coins, currency speculation, special foreign banking instruments and overseas business opportunities are reported to state securities agencies and local Better Business Bureaus (BBBs) on a regular basis. A more recent concern for regulators is offers to invest in the reconstruction of countries emerging from recent conflicts.

If you find that you have been a victim of fraud, officials warn that offshore investments will make it much more difficult, if not impossible, for you to recover your funds and for law enforcement agencies to investigate and prosecute the scammers. The complexities of international laws and criminal extradition agreements can work for criminals by increasing the burden on US regulatory and law-enforcement authorities. Foreign-based promoters and the use of email and other electronic advertising methods have made bringing perpetrators to justice all the more difficult.

Even mainstream foreign investments sometimes involve special risks and circumstances due to differing standards of marketplace regulation. (link to backgrounder/info sheet on markets, links to NYSE, NASDAQ, OTCBB and others.)

Protecting Yourself From International Securities Swindles

Here are five simple steps that investors can take to protect their interests, be they around the globe or in your own town:

1. Don’t believe the hype. If you listen to fellow investors and read the business news columns, it is easy to get the impression that you are missing out on the “hot new investment” – whatever it may be at the time. Don’t give in to the pressure to send your dollars overseas, or anywhere, just to join the crowd. Make sure your investment is appropriate for your financial objectives and, in particular, your ability to assume risk. Con artists are quick to pick up on the psychology of the investment climate and create "look alike" investment swindles that mirror "hot" investments in legitimate markets.

2. Do your homework. How are investments regulated in the nation where you are thinking about sending your money? To what extent are investors in this market protected from investment fraud and abuse? What if you have to resolve some sort of dispute related to your investment? To what government agency would you go for assistance in resolving your problem? If you don’t have the time or resources to answer these questions you should hold onto your money.

3. Remember: International isn’t necessarily better. Even if investing overseas is one of the "hottest" activities going today for investors, it doesn’t mean that the quality of the investment opportunities in other nations is any higher than those in the U.S. In fact, because of enforcement complications, the actual level of risk in overseas investments – even in mainstream market products – may be considerably higher than it is here, where markets are well regulated. (And once your money is gone, it may be impossible to recover, due to the practical difficulties involved in pursuing court action against foreign entities and individuals.)

4. Check with your state securities agency and BBB for complaints. If an investment is being sold to you, its promoter should be registered with your state securities agency. Ignore claims that overseas investment promoters are somehow exempt from state and federal securities law registration requirements -- they aren’t. Also, take the time to inquire with your Better Business Bureau about the company in question. It may have a record of other customers’ experiences with, or government actions against, the company.

5. Invest in what you know. Just because someone says that they have an oil well in Europe or a gold mine in South America does not mean that you have enough information on which to base an investment decision. Don’t be deceived by slick-produced brochures that may make an enterprise look legitimate. If you don’t have the contacts or financial resources to personally inspect your investment, consider carefully before giving up your money. In general, investors are best advised to deal with people they know and in investments they understand. If a stranger calls, pressuring you to invest "right away" in the huge profit potential of some offshore investment, think twice!