Top Investment Frauds
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
- Private Offerings
- Real Estate Investment Schemes
- High-Yield Investment & Ponzi Schemes
- Affinity Fraud
- Scam Artists Using Self-Directed IRAs to Mask Fraud
- Risky Oil & Gas Drilling Programs
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.
