<< All News Tuesday, April 5, 2005

Bismarck, ND - Securities Commissioner Karen Tyler today identified the most common ploys being used to cheat investors across the country out of hundreds of millions of dollars.

Investors should keep their guard up anytime anyone offers an investment opportunity. It pays to remember that if an investment sounds too good to be true, it usually is, said Tyler.

The following is the ranking of the top 10 threats to investors for 2005. The ranking is based on the order of prevalence and seriousness as identified by an annual survey of members of the North American Securities Administrators Association (NASAA), on whose Board of Directors Tyler serves.

1. Ponzi Schemes: The premise is simple: pay early investors with money raised from later investors. The only people who make money are the promoters who set the Ponzi in motion.

2. Unlicensed Individuals Selling Securities: Anyone selling securities without a valid securities license should be a red alert for investors. Remember: No license, no sale.

3. Unregistered Investment Products: Con artists bypass stringent state registration requirements to pitch viatical settlements, pay telephone and ATM leasing contracts, and other investment contracts with the promise of limited or no risk and high returns.

4. Promissory Notes: Empty promises can leave these notes worth less than the paper on which they are printed.

5. Fraud Against Seniors: Because they have accumulated a lifetime of savings, seniors continue to face investment fraud by con artists peddling unsecured promissory notes, viatical settlements and other investments that are either fraudulent or unsuitable.

6. High-Yield Investment Schemes: Con artists lure investors with promises of triple-digit returns through access to risk-free guaranteed high-yield instruments or something equally deceptive.

7. Internet Fraud: Stock promoters are using online boiler rooms, instant messaging, and fake websites to lure investors into pump-and-dump stock schemes.

8. Affinity Fraud: Con artists are increasingly targeting religious, ethnic, cultural, and professional groups.

9. Variable Annuity Sales Practices: Senior investors in particular should beware of the high surrender fees and steep sales commissions agents often earn when they move investors into variable annuities.

10. Oil and Gas Scams: With oil topping $50 a barrel and continued Middle East instability, regulators warn that con artists may renew schemes promising quick profits in oil and gas ventures.

Three scams also were cited for dishonorable mention - penny stocks, private placements, and investment seminars.

Before making any investment, Tyler urged investors to ask the following questions: Are the seller and investment properly licensed and registered? Has the seller given you written information that fully explains the investment? Are claims made for the investment realistic? Does the investment meet your personal investment goals?

Tyler also urged investors to contact their state securities regulator with any questions about an investment product, broker or adviser, before making an investment. One simple phone call can save a lot of money and heartache, she said.

For more information, visit the NASAA Fraud Center at www.nasaa.org. NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, Canada, and Mexico.

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