Common Investment Frauds
1. Ponzi Schemes
The premise is simple: use money from new investors to pay existing investors. The only people certain to make money are the promoters who set the Ponzi scheme in motion.
2. Affinity Fraud
Bad actors increasingly target religious, ethnic, social and professional groups. Some may be members of the group, or pretend to be, in order to gain the trust of other members. Bad actors often recruit a respected member of the group to promote their schemes by convincing them that the fraudulent investment is legitimate.
3. Unethical Sales Practices
Broker-dealers, agents, investment adviser and investment adviser representatives (collectively, “Securities Professionals”) must adhere to ethical practices in the performance of their duties on behalf of their customers. All practices of the Securities Professionals’ in connection with their securities activities in this state must be just, reasonable and not unfairly discriminatory. Examples of unethical sales practices by broker-dealers and agents include, but are not limited to, unauthorized trading, charging unreasonable fees, churning, making unsuitable recommendations, and deception. Unethical practices by investment advisers and investment adviser representatives include, but are not limited to, recommending unsuitable securities, making misrepresentations, charging unreasonable advisory fees, guaranteeing results, and misleading sales literature that describes selective prior historical results, and entering into unwritten investment advisory agreements. When advising their customers, investment advisers and investment adviser representatives engage in unethical practices if they breach their fiduciary duty to those customers.
4. Senior Investment Fraud
The growing senior population and the concentration of wealth among seniors have made this group vulnerable to investment fraud and abuse. Bad actors will specifically target seniors and prey on their trusting nature. Losses from these investment frauds and abuses may eliminate the seniors’ ability to pay for their living expenses.
These schemes involve multiple investment products including, but not limited to, oil and gas investments, promissory notes, joint ventures, certificates of deposit, life settlements, and fraudulent business opportunities.