The North American Securities Administrators Association (NASAA), a leading international investor protection organization, recently released its 2010 list of “Top Investor Traps.”
The NASAA notes that in todays’ economic times that it is tempting for investors to jump at investment opportunities to try to gain back past losses. NASAA President, Denise Voight Crawford, said, “investors rebuilding nest eggs damaged by the market collapse as well as those frustrated with low interest rates are particularly susceptible to speculative investments that most often turn a promise for profit into thin air.” Crawford implores investors to avoid securities fraud through “Knowledge, attention to detail and a healthy sense of skepticism.”
There are many resources available to assist investors in checking out the financial advisors and investment products that are being offered. Broker-dealers should be registered with securities regulators like FINRA (finra.org) or the NFA (nfa.futures.org). These organizations offer free checks on their websites to investigate if the broker-dealer or firms that investors are dealing with are registered with their organizations.
This year the NASAA offers warnings on several products and practices. The products the NASAA says need “special scrutiny” are: exchange-traded funds (ETFs) which “resemble mutual funds…[but] may contain hidden traps,” foreign exchange trading schemes which usually “[require] resources beyond the capacity of most individual investors,” gold and precious metals in which investors must be careful to avoid “gold bullion scams,” Green Schemes which capitalize on the popularity of green investments with relevant scams, and Oil and Gas Schemes which even if legitimate “tend to be highly risky and unsuitable for tradition, smaller investors.”
The NASAA also warns of several unscrupulous practices common today: Affinity Fraud in which scam artists “abuse membership or association with an identifiable group to convince a potential investor to trust the legitimacy of the investment ,” Failure to reveal a conflict of interest for the broker-dealer like high commission rates, deals that claim to be “private” or “special” which have become “an attractive option for con artists looking to steal money from investors,” deals that are offered “off the books” should be avoided because they don’t allow for supervision from the broker-dealer’s employer, and finally they warn to be wary of being marketed investments through social media.
For more information about this years’ NASAA top 10, the full release is publicly available on the NASAA website, nasaa.org.
If you feel you have been the victim of misconduct by your financial advisor and are interested in finding out more about the potential for recovery of your investment please contact The White Law Group. To speak with a securities attorney, please call the firm’s Chicago office at (312) 238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at https://www.whitesecuritieslaw.com.