Illegally defrauding investors is one of the biggest acts of embezzlement one can enact in the country. Bernie Madoff made off with as much as $50 billion from his clients in one of the biggest acts of fraud in history through a Ponzi scheme. And sadly, where there is money, there are people who are willing to dupe and deceive their way into making a fortune.
This is why people can be so paranoid about investment. Handing your hard-earned money to a financial guru whose job is to make your money grow may seem outlandish, but not everyone has an acumen for business. To avoid investment fraud, here are two helpful tips you can follow.
When the returns are too good to be true, walk away
Ponzi schemes, as well as other fake financial opportunities, could easily lure people into investing their money by simply flaunting a return proposition that they cannot refuse. Madoff promised returns of approximately 1% each month. That might seem small, but in reality, it was already too good to be true. It was small enough to elude the SEC but big enough to fool even legitimate businessmen.
Do due diligence before investing
Doing background checks isn’t so hard given today’s technology, and the information found online. There are regulatory institutions like the FINRA (Financial Industry Regulatory Authority) that helps people do background checks on brokers and is available online. Not only should you do a sweep on your broker, but you should also check the company as a whole.
Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC, whose offices are based in Los Angeles and San Diego, California. PartnersAdmin LLC was established in July 2008 with the intent to provide a quality, outsourced solution to meet the dynamic back office needs of the alternative fund industry in response to the industry’s increasing focus on best practices to reduce systemic risk and promote investor protection. For more reads on investment, visit this blog.
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