How To Prevent Investment Fraud

The Securities and Exchange Commission defines a Ponzi scheme as “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.”

The best way to avoid being taken by a Ponzi scheme is to make an effort to understand how the system is supposed to work.

The North American Securities Administrators Association recommends the following precautions:

– Contact your state or provincial securities regulator to see if the investment vehicle and the person selling it are registered.

– Contact your local Better Business Bureau to see…

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