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Tips On Not Falling Prey To A Con
Artist
Avoiding being hurt by a con artist is as easy
as doing your homework -- before you invest.
Contact this Division at
1-800-223-2579 to see if the
investment vehicle and the person
selling it are registered.
We will also be able to tell you if
the salesperson has a disciplinary
history, that is, whether any civil,
criminal or administrative
proceedings have been brought
against him or her.
Contact your local Better Business
Bureau to see if any complaints
have been filed against the
venture's promoters or principals.
Deal only with financial advisers,
broker-dealers or financial
institutions having a proven track
record.
Ask for written information on the
investment product and the
business. Such information,
including financial data on the
company and the risks involved in
the investment, is contained in a
prospectus. Read it carefully.
Don't take everything you hear or
read at face value. Ask questions if
you don't understand, and do some
sleuthing for yourself. If you need
help in evaluating the investment,
go to someone independent whom
you can trust such as an attorney
or an accountant.
Steer clear of investments touted
with no downside or risk.
Rule Number 6: For Every Silver
Lining, There Is A Cloud
Every investment involves risk. But to hear the
con artist explain it, the investment may be too
good to be true. Trust your inner voice if you
hear claims like these:
"I just got a hot tip from an inside
source that this stock will go
through the roof."
"The rumor on the Street is that
this deal is ready to take off."
"Your return is guaranteed. There's
no way you can lose money."
"Gotta get in on the ground floor
now or you'll be left out in the cold.
In fact, we'll send a messenger over
tomorrow to pick up your check."
(Con artists often use this device to
avoid federal mail fraud charges.)
"Where else can you earn such a
large return? Not in CDs or in a
savings account."
"In just a short while, your profits
will come rolling in."
"This deal is so great, I invested in
it myself."
"If this doesn't perform as I just
said, we'll refund your money no
questions asked."
"Everyone else that invested in this
did very well."
Be especially careful if the salesperson
downplays any downside or denies that risk
exists. Con artists usually are not very good at
answering important questions. Watch out if
the salesperson becomes reluctant to provide
information on the following:
The background, educational
history and work experience of the
deal's promoters, principals or
general partners
Information on whether your
investment monies will be
segregated from other funds
available to the business
Written information on the
business' financial condition, such
as a balance sheet and bank
references
The prior track record of the
business and its principals
The salesperson's name, where he
or she is calling from, who he or
she works for, his or her
background and what commission
or other compensation he or she
will receive
The salesperson's connection with
the venture and any affiliates
In addition, be wary if the salesperson doesn't
ask you questions about your past investment
experience and your ability to withstand risk.
Even if the salesperson does ask a few related
questions, take heed if you get the sense that
he or she is merely going through the motions.
Mr Metals
PS. I have many more. |
