How You Can Avoid Scams, Frauds, and Inappropriate Investments State of Oregon Division of Finance...
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How You Can Avoid Scams, Frauds, and Inappropriate Investments State of Oregon Division of Finance and Corporate Securities
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Transcript of How You Can Avoid Scams, Frauds, and Inappropriate Investments State of Oregon Division of Finance...
How You Can Avoid Scams, Frauds, and Inappropriate
Investments
State of Oregon Division of Finance and Corporate Securities
Eric Kleinman
Investor Information Coordinator(503) 947-7492
State of Oregon Division of Financeand Corporate Securities
What We Will Cover Today
The Division and the Program
Types of Fraud and Targets
What To Do Before You Invest
What To Do After You Invest
The Resources You Can Use
The mission of the Division of Finance and Corporate Securities (DFCS):
“To encourage the widest possible range of financial services, products,
and information for Oregonians, delivered in a safe, sound, and fraud-
free manner.”
State of Oregon Division of Finance and Corporate Securities
The Division
Registers securities offerings
Licenses brokerage and investment advisory firms and their salespeople
Investigates violations of securities laws
Runs the Investor Information Program
The Division of Finance and Corporate Securities:
The Program
Was established in 1998
Informs Oregonians about securities laws and alerts them to fraudulent schemes
Is funded from fines and settlements
Works with other state, local, and federal agencies to prevent fraud
The Investor Information Program:
Types of Frauds and Targets
Crimes committed for financial gain that depend upon deception and fraud rather than violence or physical force.
Definition of economic crime:
Types of Frauds and Targets
Americans are defrauded out of $300 billion every year by various scams
Americans lose $40 billion every year just to fraudulent investment schemes.
Cost of investment fraud:
Types of Frauds and Targets
High pressure sales techniques
Promise of guaranteed high returns
Promise of a “no-risk” investment
Highly secretive insider tips
The call is from another state or the investment is off-shore
Warning signs that an investment may be a scam:
Types of Frauds and Targets
No written information
Request for your account number(s)
Unusual offers to facilitate payment
Offer of a free gift or trip
Warning signs that an investment may be a scam:
Types of Frauds and Targets
1. Senior Investment Fraud
2. Variable Annuities
3. Affinity Fraud
4. Internet Fraud/Phishing Scams
5. Ponzi/Pyramid Schemes
6. Fraudulent Charity Solicitations
7. Viatical Settlements
8. Military Fraud
9. Online Job Boards/At-Home Business Opportunities
10. Grant/Lottery/Jury Duty Scams (Pretexting)
11. Foreign Currency Exchange (ForEx)/Prime Bank
12. TTY/Relay Operator Phone Fraud
The 2006 “Dirty Dozen” Potential Scams:
Types of Frauds and Targets
Misleading titles of sales persons
Uninsured investments sold in banks
Confusing account statements
Proprietary or favored funds
Unsuitable for your objectives
Potential problems with legitimate investments:
Types of Frauds and Targets
Appeal to some people’s greed
Exploit some people’s fear
Intangible products
Complex products
Con artists do not look like criminals
How Do Con Artists Con Us?
Types of Frauds and Targets
Anyone with a phone, computer or mail box.
People living alone.
People who say, “I do not invest” or “I don’t have any money.”
People who are looking to “get rich quick.”
Who can be the targets or victims?
“Perception vs. Reality”
Before the Investment
What is your name, your firm’s name and your telephone number?
How did you get my name and number?
Where is your office located?
Are you and your firm licensed to sell this security?
Asking Questions That Keep You In Control:
Before the Investment
Is the investment registered?
Can you send me a prospectus?
What are the fees? What are the risks?
If I sold this today, how much would I get?
Can you provide references?
More Questions To Keep You In Control:
Before the Investment
How are you compensated for this sale?
How long have you sold this product, and do you have any specialized designations?
How does this opportunity match my investment objectives?
Can you explain the investment opportunity independently to a friend or relative?
Even More Questions To Keep You In Control:
Before the Investment
It’s OK to be rude! You can hang up, or leave the office if you’re uncomfortable.
Don’t be embarrassed to ask questions.
Never judge a person’s integrity by how they look, sound, or dress.
Watch out for those people in your life who may be vulnerable to Con Artists.
General Financial Self-Defense Tips:
Before the Investment
Compare with other investment options,
Consult with someone you trust,
Call our division, and
Check out the salesperson!
Remember the 4 “C”s:
Before the Investment
Make sure that you are comfortable with the investment, and that it is suitable for your financial objectives, your risk tolerance, and your time horizon.
Again, The Bottom Line Is:
After the Investment
Keep your records in a safe place.
Monitor your account and investment holdings on a regular basis.
Be equally vigilant with each new opportunity; never let your guard down!
Your investment responsibilities do not end once you have selected a broker and an Investment product. You need to:
After the Investment
Contact the salesperson, broker, or manager.
Do not be embarrassed to report it.
Do not delay in reporting it.
Contact our agency, and law enforcement.
If you feel that you’ve been the victim of an investment scam:
After the Investment
Litigation
Arbitration
Mediation
Formal ways to resolve a dispute:
After the Investment
Litigation is the act of instituting a legal contest by judicial process.
What is litigation?
After the Investment
Arbitration is a process of dispute resolution in which a neutral third party makes a decision after a hearing where both parties have the opportunity of presenting their case.
What is arbitration?
After the Investment
Mediation is an informal alternative to arbitration. In this process, a neutral third party helps disputing parties to reach an agreement. Unlike an arbitrator, the mediator has no power to impose a decision on the parties.
What is mediation?
Resources
Division of Finance and Corporate Securities350 Winter Street NE, Room 410PO Box 14480Salem, OR 97301main number: (503) 378-4140toll free number: (866) [email protected]
Resources
Oregon Department of Justice1162 Court Street NESalem, OR 97301(503) 378-4400(877) [email protected]
Resources
Securities and Exchange Commission450 Fifth Street, NWWashington DC, 20549(202) 942-7040(800) [email protected]
Resources
National Association of Securities DealersTwo Union Square601 Union StreetSeattle, WA, 98101(206) 624-0790(800) 289-9999www.nasdr.com
Resources
North American Securities Administrators Association10 G Street NESuite 710Washington DC 20002(202) [email protected]
Resources
Federal Trade Commission600 Pennsylvania Avenue NWWashington, DC 20580
1-877-IDTHEFT
www.consumer.gov/idtheft
Resources
Social Security Administration Fraud Hotline
1-800-269-0271
Resources
Federal Reserve Bank Financial Literacy Site
www.FederalReserveEducation.org
Resources
US Postal Inspector Fraud Line
1-800-275-8777
www.usps.gov
Resources
You are entitled to one free credit report each year from each of the 3 major credit reporting agencies. You can order them at:
www.annualcreditreport.com
Resources
Tom MartinoConsumer Advocate/Radio Personality
www.troubleshooter.com
Resources
Clark HowardConsumer Advocate/Radio Personality
www.clarkhoward.com
The Wrap Up
The best prevention against abusive investment schemes is a properly educated investor
The Wrap Up
The best prevention against abusive investment schemes is a properly educated investor
Forewarned is forearmed when Con Artists call
The Wrap Up
The best prevention against abusive investment schemes is a properly educated investor
Forewarned is forearmed when charming thieves call
All investments carry risk
The Wrap Up
The best prevention against abusive investment schemes is a properly educated investor
Forewarned is forearmed when charming thieves call
All investments carry risk
Rarely does the victim of a scam get any money back, so ask questions before you write that check or sign any agreements!
