The Securities and Exchange Commission (“SEC”) has just released an investor bulletin entitled “Pension or Settlement Income Streams: What You Need to Know Before Buying or Selling Them” in which they warn investors of the dangers involved in structured settlements and pensions.
On May 22, 2013,
in Pension Funds,
by IW Dog
Make sure you assess the risks and find out the tax consequences, the compensation of the salesperson, the reputation of the company, and who is ultimately paying you before going further.
Stebbins and Jones traded Noble Innovations stock by using 28 accounts in 18 different names with 14 separate brokers to ultimately profit by more than $557,000
The Securities and Exchange Commission has filed a Complaint against two Arizona brokers, charged with diverting at least $1.8 million in investor money for personal use in a tankless water heater development project. According to the SEC Press Release,
On May 3, 2013,
in Uncategorized,
by IW Dog
Although commissions and bonuses are standard procedure for investment advisors, an investor deserves to be told how much their advisor is making.
On February 15, the Securities and Exchange Commission announced fraud charges against two brokers and a New York brokerage firm for pushing investors into risky investments in a clean energy company. The brokers were misleading in order to earn large commissions on the investments.
The Test Drive is a way to trick you into giving money to an investment fraud, even though you may be reluctant to do so.
Today we are bringing you another post from our Investor’s Watchdog University video series, brought to you by Page Perry, LLC.
On April 26, 2013,
in Investor Protection, Lack of Supervision,
by IW Dog
Just like with the CEO and CFO, if the CCO is found to have been negligent, they should be held accountable for their mistakes.
The Journal for Practical Compliance and Risk Management for the Securities Industry (PCRMSI) recently printed an article entitled “The Girl with the SEC/FINRA Tattoo: Disciplinary Actions Taken Against Chief Compliance Officers (November 2010-June 2011)” in which they detailed recent regulatory actions taken against Chief Compliance Officers (CCO) of various firms.
On April 19, 2013,
in Aging Parents, Baby Boomers, Investment Advisers, Investor Protection, Investors at Risk, Retirees, Senior Citizens,
by IW Dog
Eleanor Blayney of the CFP “It’s essential that elders be protected against financial abuse and be provided the tools to defend themselves against scammers… it’s time to shine a bright light on the shady operators who abuse our senior citizens.”
Seniors staying protected from financial fraud is something we talk a lot about here at Investor’s Watchdog, and a new guide from the CFP Board entitled Financial Self-Defense for Seniors is one of the best resources available for doing just that. We have taken the red flags from this guide and are discussing each one at length here. If you have an elderly parent, make sure they know about each and every one of them, so that they can stay protected from fraud.
On April 17, 2013,
in Charity Fraud, Scams,
by IW Dog
Don’t let fraudulent charities deter you from helping those in our country who are in need.
Charity Fraud involves using fraudulent measures to get money from people who believe they are making donations to charities. Last week we talked about an instance of Charitable Gift Annuity Fraud (CGA), but in light of the recent tragic events in Boston, we will discuss it again, because now is a time when fraudulent charities may be popping up.
On April 15, 2013,
in Baby Boomers, Investment Advisers, Investment Psychology, Investor Protection, Scams,
by IW Dog
The only way you can learn to spot a scam artist is to become educated about financial fraud.
A scam artist is not easy to spot. Here is another video installment from Page Perry, LLC on how to spot a scam artist.
http://www.pageperry.com/what-a-scam-artist-looks-like-video/
Arnold and Slack received about $600,000-small change in comparison to the supposed value of the diamond mine
In 1872 a group of investors, including Charles Tiffany of Tiffany and Co., were swindled by cousins Philip Arnold and John Slack into believing a Californian mine held millions in diamonds. According to History.com,
On April 10, 2013,
in Uncategorized,
by IW Dog
Sometimes even the most reputable looking investments, in this case a charity, is using deceptive tactics to entice investors
According to a press release by the Securities and Exchange Commission in February, 2012, a husband and wife team have been charged with defrauding seniors by selling charitable gift annuities, when in fact only a small amount was directed to the charities, and the rest went to paying high salaries and third-party commissions.
On April 9, 2013,
in Uncategorized,
by IW Dog
A Ponzi scheme uses money put in by later investors to pay earlier investors
Investor’s Watchdog has partnered with Page Perry, LLC to offer free videos, called Investor’s Watchdog University, in an attempt to help protect investors from financial fraud. The videos provide investors with clear explanations and definitions of the most common investment products and red flags to help investors stay protected.
On April 4, 2013,
in Uncategorized,
by IW Dog
No one knew the real story, that ZeekRewards was nothing but a well disguised Ponzi scheme.
According to an article from firstcoastnews.com called “ZeekRewards scam hits N.C. town hard”, ZeekRewards took at least $600 million from over one million investors, 50,000 of whom were from North Carolina.
On April 2, 2013,
in Uncategorized,
by IW Dog
Don’t automatically give a person credit just because they sound credible.
Keeping with the theme of red flags, let’s discuss another set of red flags that you should be on alert for. The sociopath. One in twenty-five people are sociopaths. Sociopaths can hold any job, they are highly functional and often achieve higher education degrees. We often see these people in power.
On March 28, 2013,
in Uncategorized,
by IW Dog
If you notice one of these red flags, it means you need to do more research into the potential investment and/or your advisor.
Sometimes it’s a good idea to review things we have already learned. In this case, I believe we could all benefit from a refresher course on the Red Flags of Fraud, as provided free to investors on the FINRA website. While not exclusive, this is a great sample of some of the most important points you need to remember. If you notice one of these red flags, it means you need to do more research into the potential investment and/or your advisor.
- Guarantees: Be suspect of anyone who guarantees that an investment will perform a certain way. All investments carry some degree of risk.
- Unregistered products: Many investment scams involve unlicensed individuals selling unregistered securities—ranging from stocks, bonds, notes, hedge funds, oil or gas deals, or fictitious instruments, such as prime bank investments.
- Overly consistent returns: Any investment that consistently goes up month after month—or that provides remarkably steady returns regardless of market conditions—should raise suspicions, especially during turbulent times. Even the most stable investments can experience hiccups once in a while.
- Complex strategies: Avoid anyone who credits a highly complex investing technique for unusual success. Legitimate professionals should be able to explain clearly what they are doing. It is critical that you fully understand any investment you’re seriously considering—including what it is, what the risks are and how the investment makes money.
- Missing documentation: If someone tries to sell you a security with no documentation—that is, no prospectus in the case of a stock or mutual fund, and no offering circular in the case of a bond or alternative investment—he or she may be selling unregistered securities. Also beware of stocks without stock symbols.
- Account discrepancies: Unauthorized trades, missing funds or other problems with your account statements can be the result of a genuine error—or they can indicate churning or fraud. Keep an eye on your account statements to make sure account activity is consistent with your instructions, and be sure you know who holds your assets. For instance, is the investment adviser also the custodian of your assets? Or is there an independent third-party custodian? It can be easier for fraud to occur if an adviser is also the custodian of the assets and keeper of the accounts.
- A pushy salesperson: No reputable investment professional should push you to make an immediate decision about an investment, or tell you that you’ve got to “act now.” If someone pressures you to decide on a stock sale or purchase, steer clear. Even if no fraud is taking place, this type of pressuring is inappropriate.
If you have some other red flags you want to add to the list here, email them to us at rsumrall@pageperry.com, or mention them in the comments below. We appreciate your participation!
Part of Investors Watchdog’s mission is to make investors aware of the risks and abuses in the investment marketplace. If you would like further information, we invite you to follow this blog and to visit the investment information and blog published at www.pageperry.com.
On March 8, 2013,
in Uncategorized,
by IW Dog
Accused of laundering $15 million in ill-gotten profits from an investment scam allegedly run by Mutual Benefits
Recently published article “Fort Lauderdale executive convicted of money-laundering plot” on MiamiHerald.com, tells of a Fort Lauderdale executive convicted of a money-laundering conspiracy. (more…)
On February 28, 2013,
in Uncategorized,
by IW Dog
Individual investors have more than $1 trillion in bond investments today
Bonds are currently riskier than stocks. For example, If the yield on the 10-year Treasury bond rises to 5%, which is where it was before the financial crisis, bond funds could plummet 25%, (“Bonds are riskier than stocks,” CNNMoney). (more…)
On February 4, 2013,
in UBS Financial, bond risk,
by IW Dog
Bonds have become so risky that bond-buyers are now being classified as “aggressive” investors by UBS.
Warnings about bonds and a bond market bubble continue to grow. Investors may believe that bonds are safe, like certificates of deposit, but that is simply not the case. In fact, TD Ameritrade CEO Fred Tomczyk recently told the firm’s advisers, at an annual conference, to be aware of the risks of bond investments. TD Ameritrade’s retail division even sent an article to its individual investors entitled “Bonds Are Not Gravity Defying: Be Prepared” (“TD’s Tomczyk warns about bond route,” InvestmentNews). (more…)
On January 25, 2013,
in Alternative Investments, bond risk,
by IW Dog
However, according to opinions in the financial press, both junk bonds and investment grade corporate bonds are overbought and positioned for a correction.
Junk bonds are at the end of their rally and look like a bubble ready to burst according to many analysts. Junk bonds have been driven to record levels by yield-seeking behavior. Now that a correction may be near, fund managers are reacting in two ways: some are sacrificing some yield by upgrading the credit quality of their portfolios, and others continue to seek higher yield by buying smaller, riskier deals. For high-yield bond fund investors and their advisers seeking to manage risk, it is important to know the difference and to know what is producing the yield they seek. (more…)
On January 18, 2013,
in bond risk,
by IW Dog
With bond prices still near record highs and interest rates at record lows, higher interest rates and lower Treasury bond prices are inevitable – it is only a question of when that will occur. Investment grade corporate bonds are also seen as being at risk.
The Wall Street Journal is continuing its outpouring of articles warning of a coming debacle in bonds and bond mutual funds, especially U.S. Treasury securities. Although the Federal Reserve is not expected to raise interest rates this year, after the fiscal cliff deal, U.S. Treasuries experienced a sell off (“Why Bond Funds Could Get Dicey This Year”). (more…)
Videos
LA Times Writer Exposes Dark Side of Investment Advice Industry
Personal financial advice is often not in the customer’s best interest. Much of it is suspect and overstated.
Los Angeles Times writer Helaine Olen has written a book entitled “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry.” Having written on the subject for nearly 20 years, Ms. Olen tells in her book how the financial advice industry feeds off of popular trends and caters to customers’ worst instincts, as Vanguard Funds founder John C. Bogle once said (“New book slams financial advice industry,” InvestmentNews). (more…)