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Provided by the Oklahoma Securities Commission and the University of Oklahoma OUtreach
This week, Invest Ed defines five more common investment fraud schemes affecting Oklahomans.
Promissory notes:
Promissory notes are short-term debt notes, like a loan or an IOU, issued by businesses to raise
money.
While many are legitimate, notes hawked by independent insurance agents or no-name insurance
companies may not be, as legitimate ones often aren’t sold to individuals. Be suspicious of promises of high returns and
low risk, which cannot be guaranteed.
Before investing, verify the note is a true security through the Oklahoma Securities Commission.
Unethical stockbrokers:
Some stockbrokers cut corners or commit outright fraud just to make a buck, either through:
If you think your stockbroker is putting himself above the good of your portfolio, you may want to
switch or file a complaint with the Securities and Exchange Commission.
Unlicensed Securities Sellers:
Many independent insurance agents are qualified financial planners, but are not licensed to sell
securities. Currently they are targets of scam artists who get them to sell bogus securities, using the low-risk/high-return
line as bait. Check with the Oklahoma Securities Commission to verify whether an agent is unlicensed.
Internet fraud:
Nigerian e-mail scam, though not the only form of Internet fraud, is one of the most common. It
comes in the form of an e-mail, asking for your help in transferring a large amount of money to your bank account, for which
you’ll receive a healthy cut.
It’s a way to have your bank account quickly drained. Never give out bank account information over
the Internet, especially from an unsolicited e-mail.
Mutual fund business practices:
In recent years, several well-known mutual fund companies have been investigated by the government
for allegations of late trading.
Late trading is trading done after the close of the market day, letting fund managers take advantage
of information after the rules allow. Not only is it unfair, it’s illegal.
Mutual funds continue to an excellent investment for many, as long as you avoid the shady firms.
Pay close attention to all costs and select funds with low expenses and no 12b-1 fees.
For more information, listen for the Investment Minute on your
local radio station or visit the Invest Ed web site at www.investedok.org.
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