Skip to Content

6 Signs of an Investment Scam

February 27, 2017 Blog

As an individual investor, you have plenty of important questions to consider. How do you choose a trustworthy broker or investment advisor? How do you know if an investment is too risky for your personal investment strategy? When is the right time to invest; and, when is the right time to sell? Unfortunately, as numerous recent high-profile cases have shown, you may also need to ask: Is this “investment opportunity” really a fraudulent scam?

Scam Artists Continue to Target Individual Investors

If you have questions about the legitimacy of a potential investment or are concerned that you may have lost money in an investment scam, here are six signs that you may want to speak with an attorney:

1. You Were Offered the Investment Because of Your Membership in a Particular Group.

While there are certainly investment scams target the general population, many frauds will target certain, specific populations. These are known as “affinity” frauds – frauds that rely on investors’ trust in familiar organizations and similarly-situated individuals.

2. The Investment Opportunity Was Offered to You Unsolicited.

An unsolicited offer to invest is often a red flag for investment fraud. While this applies to boiler room scams, individual investors need to be sure do their research even when they receive investment offers from people they trust.

3. You Cannot Find Information about the Investment from Reliable Sources.

Investment scams are becoming increasingly sophisticated, and scam artists will often produce professional-looking websites and email newsletters in order to create an appearance of legitimacy. But, when you dig further: (i) the source will be unwilling to provide additional information (usually because there is none); and, (ii) you will be unable to verify the information using reliable third-party sources.

4.The “Investment Advisor” or “Broker” is Not Registered.

Any person or company offering investment opportunities should be registered with the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (or both). You can search the SEC’s and FINRA’s databases of registered advisors and brokers for free online.

5. The Investment Promises “Guaranteed” Returns.

No investment is a sure thing. If someone tries to get you to invest by guaranteeing that you will realize substantial returns, there is a strong chance that you are being targeted in a scam. High-pressure sales tactics are also a hallmark of investment scams, and an offer that “expires soon” or “won’t last long” is likely to be fraudulent as well.

6. The Investment Shows Other Common Signs of a Fraudulent Scam.

While scam artists are constantly finding new ways (like social media) to target potential victims, most investment scams follow one of a number of different well-known structures. For more information, we encourage you to read:

Speak with an Investment Fraud Attorney at Zamansky LLC

Located on Wall Street in New York City, Zamansky LLC is an investment fraud law firm that represents individual investors nationwide. If you are concerned that you may have been targeted in a fraudulent investment scam, call (212) 742-1414 or contact us online to schedule a free consultation today.