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Karen Tyler

Commissioner
ND Securities Department
600 East Boulevard Avenue
State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone: (701)-328-2910
Toll Free: (800)-297-5124
Fax: (701)-328-2946
Grafton Office
701 W 6th Street, #312
Grafton, ND 58237
Phone: 701-352-4592

Top Investment Frauds

Fraud spelled out with scrabble pieces

North Dakota Securities Department Expands Annual Top Investor Threats List

JOBS Act Implementation Prompts Additions of Threats to Small Business Owners

January, 2014 – The North Dakota Securities Department today expanded its annual listing of financial products, practices and services that threaten to trap unsuspecting investors to include lurking dangers facing small business owners.

“With the rollout of rules required by the JOBS Act, investors and small business owners alike must be on heightened alert for questionable investment offers and services,” said Commissioner Karen Tyler.

Ms. Tyler said she is concerned that the recent lifting of an 80-year-old ban on the advertising of private offerings, mandated by the JOBS Act, will lead to greater abuse by unscrupulous promoters. The implementation of the JOBS Act also has created opportunities for unregulated third parties to provide ancillary services.

“When utilizing a crowdfunding portal or an accredited investor aggregator, it is important that a small business conduct due diligence and recognize that use of an unregulated third party to provide such services does not change its obligations under federal and state securities laws,” Tyler said. “Investors are not alone in their potential to be scammed. Using a fraudulent portal means both the business and the investor stand to lose.”

The following list of the Top 10 financial products and practices that threaten to trap unwary investors and small business owners was compiled by the North American Securities Administrators Association (NASAA), of which North Dakota Securities Department is a member:

Top Threats to Investors & Small Businesses

New Investor Threats

New Small Business Threats

Persistent Threats

Source: North American Securities Administrators Association Enforcement Section

Tyler reminded investors to independently verify any investment opportunity as well as the background of the person and company offering the investment. State and provincial securities regulators provide detailed background information about those who sell securities or give investment advice, and about the products being offered. “You wouldn’t trust your health to an unlicensed doctor, so why jeopardize your financial health by trusting your hard-earned money to an unlicensed broker or investment adviser?” Tyler said.