Decisions on where to invest money are not easy to make. It takes knowledge of the investment being offered, good research into who is offering the investment, and an understanding of the common warning signs that an investment opportunity is not legitimate.
ADT reported that from 2016 to 2018 Americans who were the targets of investment scams lost an average of $8,648.1 The $1.9B that the Federal Trade Commission reports that Americans lost to general fraud in 2019 reveals that seniors age 70 and up lose more than double the amount that younger victims lose. While a person in their 30s loses an average of $379 to fraud, that amount increases to $800 for people in their 70s, and $1600 for those 80 and older.2
The month of April is recognized each year as National Financial Capability Month in an effort to “highlight the value of high-quality financial education to improving Americans’ financial capability.”3
As part of this month-long financial education effort the U.S. Securities and Exchange Commission (SEC) released a list of resources aimed at providing investors with the tools they need to make sound investment decisions. A premier place to gain knowledge of investing is the SEC education website, Investor.gov.4 Some of what this website provides includes the following:
A tool to learn about your investment professional’s background, registration status and more. This information includes disclosures about any broker misconduct, the nature of the allegations against the professional, the amount of settlement requested, and the final settlement amount.
Education resources to help you understand common investment vehicles such as stocks, bonds, mutual funds, exchange-traded funds, and insurance products such as variable annuities.
A guide to understanding fees charged on investments, such as management fees, redemption fees, exchange fees, account fees, mutual fund fees and other types of fees.
Information on how to use the EDGAR database to research a public company’s financial information and operations by reviewing its SEC filings. EDGAR can also aid in researching SEC information on mutual funds, exchange-traded funds and variable annuities.
Access to financial planning tools such as a required minimum distribution calculator, a compound interest and savings goal calculator, a social security retirement estimator, a retirement ballpark estimator, a mutual fund analyzer, and a 529 expense analyzer.
An entire section on investment fraud. This includes information on types of fraud, how to avoid fraud, and resources for fraud victims. It also includes useful information on how to monitor your investment accounts for suspicious activity, such as unauthorized transactions and how to better understand brokerage account statements.
The SEC is continually updating their education resources to include the latest topics. These include investor alerts about the downside of investing in the latest “hot stocks” based on social media and another alert cautioning about celebrity endorsed special-purpose acquisitions companies (SPACs); how to spot coronavirus-related investment scams; and how to identify fraudulent schemes targeting Main Street investors.5
“Our office continues its outreach efforts and wants to help investors in every way possible as they navigate our markets and understand how to protect their money and make informed decisions to secure their financial futures,” said Lori Schock, director of the SEC’s Office of Investor Education and Advocacy.
Holding brokers accountable for their negligent acts needs constant and consistent advocates. Our Securities Law Firm in Detroit has been diligently protecting and recovering the losses of investors in Michigan for more than 20 years. If you have questions about your investments, your broker’s management of your account or feel you have been a target of investment fraud our Securities Attorneys can help. Call for a consultation today.
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1 Nigerian Prince Scams Still Rake in Over $700,000 a year (cnbc.com), April 18, 2019
Link: https://www.cnbc.com/2019/04/18/nigerian-prince-scams-still-rake-in-over-700000-dollars-a-year.html
2 Consumer Fraud Complaints Hit Record High by Katherine Skiba, AARP, January 23, 2020
Link: https://www.aarp.org/money/scams-fraud/info-2020/ftc-fraud-complaints-rise.html
3 A Proclamation on National Financial Capabilities Month, 2021, 3/31/2021
Link: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/03/31/a-proclamation-on-national-financial-capability-month-2021/
4 U.S. Securities and Exchange Commission
Link: https://www.investor.gov/
5 SEC Promotes Investor Awareness During National Financial Capability Month, 4/5/2021
Link: https://www.sec.gov/news/press-release/2021-55