Bad Economy Means Good Times for Cons
Posted on September 1, 2011
Filed Under Investor Mistakes, Personal Investing
Step right up! Move closer! You say times are hard? Job loss got you down? You say your financial life ain’t running at full speed? You’ve come to the right place my friend! We have just the remedy for what ails ya.
Yes, sad but true – when the economy is weak, hucksters flourish. It makes sense that during periods of economic malaise people seem most willing to let their guard down. “Something,” folks figure, “has to be better than what I’m doing.”
Con artists never disappear, of course. But over the past few months we have seen an unusual flurry of arrests and indictments against financial fraudsters.
Last week the North American Securities Administrators Association (NASAA) released its annual list of fraudulent financial products and practices. While the individual cases are new, the basic themes are all too familiar, with every sales pitch based on greed or fear.
NASAA’s Enforcement Section identified the top ten financial products and practices (five of each) that threaten to trap unwary investors:
Products: distressed real estate schemes, energy investments, gold and precious metal investments, promissory notes, and securitized life settlement contracts.
Practices: affinity fraud, bogus or exaggerated credentials, mirror trading, private placements, and securities and investment advice offered by unlicensed agents.
Each of these is a topic unto itself, loaded with hidden dangers. Let me just give you one sadly funny example from the NASAA, from under the heading Exaggerated Credentials:
- Securities regulators in Utah came across a broker who listed “C.H.S.G.” after his name on his business card. When asked, the broker told regulators the initials stood for “Certified High School Graduate.”
As always, it’s buyer beware. If the pitch sounds too good to be true, it is.
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