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Show DnimsmiDmifiimg Euntteiresit How you can avoid investment fraud by Dennis Hinkamp consumer information writer Utah State University I'm sure Utahns are getting tired of hearing Utah is "the investment fraud capital of the world." We hold this dubious distinction because of some of the large-scale frauds that have started in Utah the past several years. Investment fraud is of increasing concern throughout the country. This particular type of fraud has increased to the extent the legitimate investment agencies are worried about losing business Groups such. as the Commodity Futures Trading Commission (CrTC) and the National Futures Association (NFA) are starting their own campaign against investment fraud. As part of its consumer education campaign to head off investment fraud, the NFA suggests asking these questions before you invest: 1. Exactly how much money will go to commission and management fees? Insist on specific answers, not "negotiable fees based on the profits you are going to make." 2. What are the risks involved in the particular investment? All investments, by definition, involve some degree of risk. Keep in mind that if the person trying to get you to invest had real knowledge of a "sure thing" he probably wouldn't be spending time trying to get you to join him. 3. Kow can I obtain a copy of your "risk disclosure" statement? When the investment involves commodities, the firm must have this document if it is registered with the CFTA. 4. Will you send me copies of your literature and any prospectus your firm might have? This will head off investment schemes that use the "urgency" ploy. Often, the fraudulent investment invest-ment firm will not have any documents to send you. Or they will tell you there is not enough time to get it to you in, the mail. 5. Would you mind explaining your proposal to a third party such as my lawyer, accountant, investment advisor or banker? Even if you don' t actually have any of these people at your disposal, it is a good question to ask. If they try to dodge the question, you are probably dealing with fraud. If they do agree to meet with one of these people, it will be worth the extra expense to hire one of them to look over the contract before you commit your money to an investment. . 6. Can you provide references? References should not be other investors who have made money. They may be hand-picked by the swindler. Ask for recommendations from a well-known bank or brokerage house. 7. Can you give me the names of your firm's principals and officers? ' Although some fraud firms can also come up with fraudulent names, the hint that you are the type of person that checks into things can be a fast turn-off to a swindler. 9. Where did you get my name? If the answer is "from a select list" chances are you were picked from the telephone directory or a mailing list purchased by the swindler. Be equally suspicious of a neighbor or church referral. You may both be getting swindled. Don't let the fear of investment fraud keep you from investigating new ways to get the most out or your money, but take the time to check out all companies thoroughly. A good rule of thumb is that any investment that has to be made immediately, shouldn't be made at all. |
