For investors, securities fraud is a serious concern. With the increase in cybersecurity threats and online activity, there are many more opportunities for unscrupulous individuals to take advantage of an unsuspecting individual. Advanced fee schedule, hedge fund fraud, foreign currency fraud, Ponzi schemes, and high yield investment fraud are just a few of the illegal activities that could catch you off guard. Resolving and prosecuting criminals in these areas may involve the SEC, a banking expert witness, the FBI, and foreign agencies. Avoiding these situations is the best way to ensure your funds stay safe. Here are some elements of fraudulent activity.
High Yield Investment Fraud
The seller or broker will make promised of extremely high rates of return though there is little to no risk for your money. These opportunities may sound too good to be true, and the investment could take the form of real estate, commodities, precious metals, or securities. You might be contacted by e-mail, over the phone, in-person, or you may respond to an online ad. For the most part, the offers are generally unsolicited.
Pyramid and Ponzi Schemes
As made notorious by Bernie Madoff, this scheme collects money from victims in order to meet promises of high returns that were promised to earlier investors. The payouts to the investors make it look like a legitimate money-making enterprise, but the investors are the only source of funding. The last person to pay in usually absorbs the most loss.
Advanced Fee Schemes
Within these plans, the victims will contribute a small sum of money for the promise of a larger gain. However, these gains won’t materialize, in spite of having to pay an initial fee to cover the cost of the investment.
The best rule of thumb for investments is the realization that nothing comes from nothing. You won’t make money overnight, and if it sounds too good to be true, then it probably isn’t.