Five Signs of Investment Fraud

Investors deserve peace of mind. Whether you are saving up to buy a home or for your retirement, you should be able to have confidence that your investments are safe, secure and truly appropriate for your individual needs. Unfortunately, far too often, investors are taken advantage of by bad financial advisors.

When investment losses occur, whether by a negligent broker or an outright scammer, investors have a legal right to hold the responsible party liable for their losses. Our experienced investment fraud attorneys can help wronged investors do this. Of course, ideally, you will be able to avoid losing any money in the first place! To help you protect yourself, we have put together a list of five signs that suggest an investment opportunity might actually be fraud.

1. Huge Returns

There is no such thing as a “can’t miss” investment. While all investors want to achieve above market returns, it should be clear that consistently doing so is incredibly difficult. If a broker, company or any other individual is trying to get you to invest your hard-earned money by making very lofty promises, warning lights should be going off in your head. You might be dealing with a scam. The old adage is almost always correct: If an investment opportunity seems too good to be true, it probably is.

2. Investment is “Guaranteed”

All investments have risks, and no return is truly guaranteed. A good investment advisor will honestly and openly explain the risks to you. They will not overpromise and they will not downplay the risks. If you are being sold on an investment that promises guaranteed returns, you are likely dealing with a scam.

3. High-Pressure Sales Tactics

A good investment opportunity should practically sell itself. After all, there is no need to employ high-pressure sales tactics that you would see in an infomercial if the underlying investment product is really that good. Indeed, high-pressure sales tactics strongly suggest that you are dealing with some type of fraud or overhyped investment opportunity. If it feels like you are dealing with a high-pressure salesman, save your money and walk away.

4. The Investment Opportunity is Difficult to Understand

You should always understand exactly what you are investing in. Do you know why the investment opportunity is good? Do you understand exactly how it makes money? You should, and if you do not, avoid the opportunity. Investments that are difficult to understand may be fraud schemes, such as Ponzi schemes. The individual or company offering the investment opportunity should be able to clearly explain how and why you will be able to make money.

5. Unregistered Advisors

Finally, you should avoid investment opportunities that are offered by unregistered individuals. Always work with a broker and brokerage firm that is registered (and in good standing) with the Financial Industry Regulatory Authority (FINRA), the U.S. Securities & Exchange Commission (SEC), or state securities regulators. While these advisors might not be perfect, they have undergone a basic level of vetting and have a legal duty to conform to industry standards.

Were You a Victim of Investment Fraud?

We can help. At Investor Defense Law LLP, our experienced investment fraud attorneys have helped many victims recover the full and fair compensation they rightfully deserve. We can help you determine whether or not you have a viable claim. To learn more, contact us today to schedule your free 30-minute case evaluation.