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You may have lost money in your investment portfolio,
due to mismanagement and not even know it.

Potential investors' primary duty: guarding against fraud

An educational piece written by the Financial Industry Regulatory Authority notes the well-known utterance of famed bank robber Willie Sutton that crooks "go where the money is."

Finra points out that the route con artists most like to tread in the securities realm is any trail leading toward comparatively well-heeled individuals and couples. Because it takes a long time for most people to accumulate any significant wealth, that often means that fraudsters target an elderly audience for their typical "buy this and buy it now" approach.

That approach is often aggressive, riddled with half-truths or totally false declarations and bogus profit guarantees. Every pitch is different, of course, but Finra stresses that there is an overall commonality in strategy. When a potential investor senses its application and that the "tricks of the trade" are being employed to snare yet another victim, self-protective antennae need to be engaged to fight back.

Here are some Finra-cited "red flags of fraud" that might reasonably put most people on guard that the "opportunity" being dangled before them is without merit and best left untouched:

  • Flat-out guaranteed results in offered securities without any element of risk (there is no such thing)
  • Claimed returns that always point north , even when market conditions are shaky and in a downturn
  • Offers that are only open to a select few investors and must be acted on quickly
  • Lack of written documentation relevant to the investment

There is much more than that to alert a targeted investor of a scam, of course, including the all-important gut check pursuant to which sheer instinct can play a key role in helping an individual avoid falling prey to a securities ruse.

Finra also notes this: A timely and candid discussion with a seasoned attorney who routinely protects consumers against fraud can minimize an adverse outcome and help an investor safeguard against unlawful scam attempts.

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