The New Rash Of Investor Rip-Offs… And How To Avoid Them

Technology like crowdfunding and the rise of various, new asset classes including Bitcoin and cryptocurrencies have combined to create some exciting, new opportunities for investors. But recent statements from the North American Securities Administrators Association (NASAA) warn that scammers and con artists are also following the money, and there has been a significant increase in fraudulent activities involving many of these newly popular investments and asset classes.

To help investors spot red flags and discern worthwhile opportunities from scams, Ponzi schemes, and investor rip-offs, here are five (5) relatively new types of investments, and the (prominent) threats against which potential investors must now contend:

The new investments that are being targeted by scammers.

Promissory Notes

As it happens, promissory notes top NASAA’s list as one of the foremost emerging threats facing today’s investors. To illustrate the severity of the problem, nearly three out of four regulators cited promissory notes as a leading cause for complaints and/or investigation.

For those not familiar with what promissory notes even are, they are traditionally shorter-term instruments used by businesses to raise capital. Once only available to sophisticated, well-connected, and/or corporate investors, high-yielding promissory notes are now more widely accessible to average investors via the Internet and crowdfunding applications. But because not all promissory notes require securities registration, fraudulent activities are on the rise, and investors are encouraged not to be enticed solely by the promise of high yields, and to always do their due diligence about the company and issuer(s) of the notes.

How to Spot (and Avoid) Investor Rip-Offs:

  • Be particularly wary of promissory notes with a duration of 9 months or less, some of which may not be registered with securities administrators
  • Conduct thorough research about the company and/or any issuing personnel before investing

Initial Coin Offerings (ICOs) & Cryptocurrency CFDs

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Disclosure: I understand that Online Trading Academy instruction will prepare me to actively trade securities and/or other financial instruments for my own account at an appropriate financial firm ...

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TheExitFirm 2 years ago Member's comment

As the saying goes, when a person with money meets a person with experience, the one with money walks away with experience and the ones with experience walks away with the money. The rip-off merchants take this to a new level.

Emma Davidson 2 years ago Member's comment

Lol, I hadn't actually heard that one before.