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Avoiding Investment Fraud

When you have decided to invest your money, you are making a significant decision about your finances. There are many inherent risks that come with investing, but there is also the chance of a significant return, which encourages many individuals and businesses to continue investing. This is a serious decision that can have an important outcome in an individual’s financial well-being. For this reason, many people choose to work with investment brokers or another financial professional, who have the knowledge and expertise to help them make smart investing choices. Although many brokers really do work for the benefit of their client, some also take advantage of their position and make money at their client’s expense.

According to the FBI, investment fraud is defined as “the illegal sale or purported sale of financial instruments.” This refers to any sale made with an investment broker or another financial assistant that does not have any legal standing or does not intend to help the client receive any money in return. These schemes can usually be identified if the terms of the investment seem too good to be true. Some examples of these include:

  • Offers of low or no risk investments
  • Guaranteed returns
  • Overly-consistent returns
  • Complex strategies
  • Unregistered securities  

Although it may seem difficult to identify these factors on your own, the U.S. Security and Exchange Commission notes a number of ways you can protect yourself from entering into a fraudulent scheme. Some of the best steps you can take include:

  • Asking questions: make sure to do your research before entering into any kind of investment. The information you find will help you determine if it is a legitimate offer
  • Getting to know the salesperson: look into the individual’s licensing and credibility as well as the firm’s history with investments
  • Being wary of unsolicited offers: companies that reach out to you to invest in them may be looking to take money from unaware investors. You should always look at a company’s financial history before choosing to invest

Each of these strategies requires you to do extra work before you invest, but this is the best way to keep yourself from entering into a fraudulent operation.

Protecting your financial interests is an essential part of being financially stable in this uncertain economy. With the prevalence of scammers growing in all different areas, you can never be too careful about where you are sending or spending your money. Although it is certainly easier to hope for the best when investing, this is not a safe or smart choice to make. This is an important decision that you must take time to think through

If you believe you have already entered into a fraudulent investment, however, you are not alone. An investment fraud attorney can help you take the appropriate steps to get your money back and stop the firm or broker at fault. It may be a difficult road, but these attorneys are prepared to help you understand your rights and take back the money you have lost.