Securities fraud covers a lot of topics. They include Ponzi and Pyramid Schemes as well as Late Day Trading, Advanced Fee Schemes and many other ways to take money from victims. This is very familiar due to the name Bernie Madoff. Bernie worked with high profile clients but con artists committing securities fraud can come from anyone. The red flag should fly when an investment person promises a high rate of return coupled with little to no risk. There is no get-rich-quick scheme that works. They may sound too good to be true and this is because they are too good to be true. Contact may come via phone, e-mail, or in person. All of these schemes take money from victims and use it to either pay others and make them think they are making money all the way to the money being outright stolen.
Gains never materialize because there is no real investment. Warning signs are the offer sounds too good to be true, the pressure is very high, they approached the victim and asked for personal information. The best way to avoid these scams is do not believe everything you’re told. Research the investment, there should be clear information from neutral sources. Ask your bank, financial adviser, or even your attorney. Check federal and state regulators to see if there are complaints against the company or person. Request written information and get all offers in writing and keep the written information.
Do not be embarrassed or afraid to ask someone else to review the offer or information. If you believe this is a scam, file a complaint with the Securities and Exchange Commission or even law enforcement. If you’ve given them money and realize it’s a scam, then the faster you report it, the more chance you may get your money back.