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Investment Scam Avoidance Tips from the SEC

Simms Law, P.C. June 14, 2022

The Securities and Exchange Commission (“SEC”) periodically issues alerts to warn investors of scams and other fraudulent activity. Typically, these warnings are based on recent trends in investment fraud. If you are an investor and would like to ensure that your investments remain safe, please review the following advice from the SEC on how to avoid popular investment scams

How To Avoid Popular Investment Scams

Ponzi Schemes that Target the Elderly

The elderly population is a frequent target of scammers. One type of scam that often claims elderly victims is the Ponzi scheme. Ponzi schemes involve the use of new investors’ money to make payments to existing investors. This tricks existing investors into believing that they are receiving good returns on their investments. Signs of a Ponzi scheme include:

  • Promises of high returns with little risk 

  • Unregistered or unlicensed sellers

  • Steady returns despite market fluctuations

SEC Impersonators

The SEC has warned investors that scammers sometimes impersonate the SEC when conducting their scams. These individuals obtain personal information by offering to help investors purchase new stock or confirm trades. They then use this information to steal money from these investors. The SEC advises investors to never give any information over the phone or email to an individual claiming to work for the SEC. The SEC never reaches out to investors directly to confirm trades, establish trading accounts, or to record any details of such activities. In addition, federal government agencies never endorse, sponsor, or recommend any services, products, securities, or firms.  

Natural Disaster Scams

Finally, natural disasters, such as hurricanes, floods, oil spills, and earthquakes, often bring with them unscrupulous individuals looking to take advantage of other people’s misfortune. Generally, these scammers target individuals who receive large, lump-sum payouts from insurance companies. Frequently, these scammers approach such individuals with phony investment opportunities, such as Ponzi schemes. Other times, scammers claim to promote businesses that are involved in recovery and cleanup efforts. Therefore, you should remain wary of anyone who approaches you with an investment offer following a disaster of any kind.  

Contact Our Fort Lauderdale Investor Representation Attorney 

At Simms Law, P.A., one of our primary focuses is the representation of investors—including those investors who believe they’ve been the victims of investment fraud and other financial scams. For the retail investor, securities fraud typically occurs when a broker or financial advisor misrepresents the risks and key characteristics of an investment, causing the investor to purchase an unsuitable security. At Simms Law, we always take investors’ concerns seriously and are aware of what is at stake when an investor suffers losses due to financial fraud. If you suspect that any suspicious activity has occurred in any of your investment accounts, or if you believe that you have been misled about the nature and risks of any of your investments, please contact us today for a free consultation.