David Lerner Associates News

Preventing Investment Fraud

Core Facts

Friday, June 1, 2018


According to the SEC, there were over 754 enforcement actions in 2017. All told, parties in the Commission’s actions and proceedings were ordered to pay a total of $2.9 billion in disgorgement of ill-gotten gains, an increase over the prior year. 

Projections are for growth in the financially fraudulent, due to better access to technology. The good news is potential victims, and more importantly, the professionals trying to catch the bad guys, also have access to high-tech solutions and can use it to their advantage. That, coupled with a recent trend that focuses on Financial Literacy and Fraud Prevention, should make you can feel a little safer.

And there's more good news - the U.S. Government now not only protects, but monetarily incentivizes whistleblowers. This makes life a lot easier for those good-conscience individuals who want to do the right thing and take down the criminals in their midst.

But before you rest too easy, financial fraudsters use effective tactics to get people to part with their money. And if you don’t know what they are, you could fall prey to an investment scam.

Verify credentials

Don't fall for a fancy title or the illusion of success. A conman relies on the fact that if they look successful, you won't bother checking their credentials. Investment professionals must register with FINRA, the Securities and Exchange Commission or your state securities or insurance regulator. You can use FINRA BrokerCheck, [http://brokercheck.finra.org] a free online tool to get information on brokers and investment advisers.

"Phantom Riches"

Be skeptical of investment pitches that guarantee a certain return or promise spectacular profits. They are what fraud-fighters call "phantom riches" that you will never see. No salesperson can make those kinds of promises. The reality is that every investment involves risk.

"Everyone is doing it"

Remember what you learned in the schoolyard. Don’t fall for peer pressure. Don't believe claims that "everyone" is in on the deal. Instead find out why the investment is sound. Remember, affinity frauds are scams that prey upon members of the same social circle, religious group or ethnic background.

“You have to act now!”

If the salesperson tells you that the offer is for a limited time only, or that investment opportunities are limited, consider it a red flag. A legitimate investment will still be there tomorrow.

Never feel obligated

Don't invest because the seller gives you something for free. Salespeople count on those freebies to guilt you into buying what they are selling.

Education is the best defense

Arm yourself with information. Learn to spot the red flags of investment fraud so you can protect yourself and your loved ones.



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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Author: Sally Falkow

Categories: David Lerner Associates News


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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Lawrenceville, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com

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Jake Mendlinger
Account Manager
516.829.8374 X 232

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