front line of defense against investment fraud is you, the individual investor.
An unscrupulous con man or fast-talking "financial adviser" in a few minutes can
swindle an unsuspecting investor out of a nest egg that took a lifetime to
build. Unlike muggers and thieves, investment fraud artists don't take your
money against your will; they persuade you to hand it over willingly. Don't fall
for their tricks. Follow these tips to protect yourself and your family from
fraud. Remember that "an ounce of protection is worth a pound of cure."
Strangers Asking for Money
Never trust a
stranger who calls and asks for your money.
Almost anyone can sound nice or
honest over the telephone - many swindlers ply their trade with the best of
Do not feel
indebted to someone who gives you "unsolicited' financial advice. This person
may be trying to gain your trust so he can make fees and commissions by
investing your money, sometimes in unstable investments.
When a stranger
describes a promising investment, always ask yourself: "If this investment
opportunity is as good as the salesman says, why is he calling me, instead of
keeping it to himself and his friends?"
If an investment sounds "too good
to be true," it probably is. Some unscrupulous companies try to entice investors
with promises or returns as high as 25%, 50% or even 500%. Such claims are
Never give out
personal financial information like credit card or bank account numbers or
balances over the telephone unless you are absolutely certain that the caller is
Even then, ask yourself if there is another way to do business
that avoids your giving this information over the phone.
shown that sales persons who use high-pressure tactics to force an investor into
an immediate decision are almost always pitching frauds - they don't want you to
think too carefully or find out too much because you may figure out the
Insist on receiving a prospectus or printed offering materials. READ
THEM. Any investment worth making will still be available after you have had
time to read about it.
Don't believe the age-old lie that you will lose
money if you don't get in right away. The truth about such claims almost always
turns out to be that you will lose money if you do get in.
If you have questions, ask
your attorney, accountant, or financial adviser to explain the
"reload" scams. Con artists know the panic people feel after a sudden financial
loss. They know that it's the best time to promise to recover the original funds
in another "sure thing" scheme. Don't fall for the same (or a similar) scheme
Unless you are
absolutely sure that the person is legitimate, confirm that your broker or
financial adviser is registered and in good standing.
Securities Division (410-576-7784) maintains and has access to databases with
information about brokers, investment advisers and specific securities.
The National Association of Securities Dealers (1-800-289-9999) also can provide
detailed information about brokers and financial advisers.
Be wary when a
financial planner says "leave everything to me."
Monitor the activity on
your account. Insist on receiving regular statements.
Never be embarrassed
or apologetic about asking questions about trading activity that looks excessive
or unauthorized. It's your money, not your broker's.
Keep all of your records relating
to your investments, including notes of conversations you have with brokers,
salespersons, financial advisers, and the like.
If your broker or
adviser stalls or hesitates when you want all or part of the principal of, or
profits from, your investments, ask the reason for the holdup. You may have
uncovered a questionable practice.
If you suspect that something is amiss
and the explanations you receive are not satisfactory, call the Securities
Division and file a complaint.
If you think you have been defrauded in an
unconventional investment, don't hesitate to check with the Securities Division.
The definition of "security" is very broad and includes not only stocks and
bonds, but also certain partnership interests, notes and investment contracts.
Don't let embarrassment or fear keep you from reporting investment fraud
Call us. We're here
to help!The Maryland Securities Division(410) 576-6882
200 St. Paul Place, Baltimore, MD 21202
410-576-6300 / En español 410-230-1712 / 1-888-743-0023 toll-free / TTY: Dial 7-1-1 or 800-735-2258