Older Americans control a significant portion of the wealth in this country. They also frequently have fears about the future of their investments and their ability to remain financially solvent in their later years. These fears, coupled with the cognitive decline that many older adults experience, make them an ideal target for financial scammers.
You can protect yourself and your loved ones from losing money to securities fraud by learning to recognize the signs of financial scams. Read through the list of red flags below and share them with other investors in your life.
If you do become a victim of fraud, do not feel embarrassed or ashamed. It can happen to anybody. Instead, seek legal help from a securities fraud lawyer who can help you seek the compensation you deserve.
Senior Investment Fraud Red Flags
1. Pressure to Act Quickly
1. Pressure to Act Quickly
If an investment opportunity is truly a good opportunity, it will exist long enough for you to do your research about it and its potential returns. If a salesperson pressures you to act quickly to avoid “losing” an opportunity, be skeptical of his or her claim. This is typically an effort to lock investors into a purchase by preying on their emotions, robbing their chance to think critically about an offer.
2. Offers of Free Meals and Other “Perks”
As the old saying goes, “there’s no such thing as a free lunch.” This is true when it comes to investment opportunities. If you are invited to a seminar offering a free meal along with valuable information about making solid investments and maximizing returns, toss the invitation in the trash.
These seminars are designed to pressure attendees into making purchases through hard sell tactics like pressure to buy quickly, incentives for purchasing at the seminar, and a refusal to accept “no” as an answer.
If you do choose to attend such a seminar, perhaps to protect a friend or loved one from falling prey to a scam, commit yourself not making a purchase. Practice your refusal strategy and if necessary, leave the seminar before it is over.
3. Guarantees of High Returns and No Risks
Nothing in life is guaranteed. This is especially true in the investment world. If you are offered an investment opportunity that guarantees anything, such as no risks or guaranteed high returns, you are being lied to. The only circumstance under which you can expect consistent, guaranteed high returns is participation in a Ponzi scheme, which will inevitably fail when the perpetrator is found guilty of fraud or the system collapses when it is no longer sustainable. Even the most stable investments have their ups and downs.
4. No Documentation of the Investment
When a security does not have the proper documentation, such as a prospectus or an offering circular, you cannot know whether the security is legitimate. Ask for the documentation showing a security’s history and growth if you are offered an investment opportunity. A lack of proper documentation can mean that you are being offered an unregistered security.
5. A Lack of a Broker License and Similarly Suspicious Facts About the Seller’s Background
The person offering to sell you a security should be able to provide his or her broker license when asked. If a seller is hesitant to show his or her license or tries to sidestep your request, be wary. You can look up a broker by name in the Security Exchange Commission’s Internet Adviser Public Disclosure Database or the Financial Industry Regulatory Authority’s BrokerCheck database to see an individual’s license number, his or her professional background, and whether he or she has faced disciplinary action in the past.
Even if a broker’s license is legitimate, be wary if your search turns up an association with brokerage firms that have had their accreditation terminated or if the broker has a history of changing firms frequently and internal reviews by employers.
Work with an Experienced Florida Securities Fraud Attorney
If you are not sure if an investment opportunity is legitimate, speak with an experienced securities fraud attorney or another knowledgeable party. It is rare for investment scams to be obvious – often, they are disguised as legitimate opportunities through careful marketing and fabricated or exaggerated returns.
To learn more about investment scams and how you can protect yourself and your family, speak with a member of our team at Sonn Law Group. Contact our firm today to set up your initial consultation in our office. We are located in Florida and serve clients from the United States, Puerto Rico, and South America.