Common Investment Scams
When investors are in search of a good way to invest their money, they’re typically looking for low-risk, high-return opportunities. Unfortunately, these kinds of opportunities are hard to come by, as most investments do have a substantial risk, and returns can take time.
The following are some of the most common investment schemes. If you are aware of any such scheme and would like to report it to the Securities and Exchange Commission (SEC), call our office today.
Ponzi schemes are some of the more difficult scams to detect because business owners and other finance employees are very knowledgeable about how to present their “opportunities” to potential investors. There is a significant interest in recruiting numerous investors, and the swindler will promise huge returns on minimal investments.
They keep the scheme alive by paying older investors with new investors’ money while pocketing what they can. Ponzi schemes always fall apart eventually; either investors start wanting to collect en masse and the fraudsters can’t keep up, or they pick up and take off without a word, leaving investors penniless.
Prime Bank Schemes
A prime bank scheme is always very secretive and claims to have access to large global financial instruments that can make a huge return rather quickly. The problem is that these instruments do not exist, and neither do the banks or markets supposedly associated with them.
If you see the phrase “prime bank” or are being sworn to confidentiality without having your questions answered, chances are you’re becoming a victim of a prime bank scheme.
Pump and Dump Schemes
Stock brokers working pump and dump schemes “pump up” a company’s inexpensive stock, making it seem as though it’s about to significantly increase in value. When a number of investors choose to invest in this pumped up stock, the stock soars quickly before falling just as fast.
The unscrupulous brokers sell the stock while its price has peaked, leaving investor shares worthless when the stock falls but quickly lining the pockets of the broker.
Some signs you might be dealing with a pump and dump scheme could be if there is minimal information out there about the business you’d be investing in or if you receive a voicemail making it seem as though a broker has “accidentally” provided you with insider information.
Consult with a Securities Fraud Whistleblower Attorney
Have you become aware of an investment scam a colleague or superior in your workplace has been running? If so, reach out to a securities fraud whistleblower lawyer at Meissner Associates immediately.
We can help you report your tip to the SEC and potentially secure a whistleblower award if the commission is able to take enforceable action against the violator. You can schedule a no-obligation consultation today by filling out the contact form below or giving us a call at 1-866-764-3100.