Five Warning Signs of Financial Fraud

Since older Americans are often targets of investment fraud, the Securities and Exchange Commission (SEC) issued an alert listing five “red flags” to look for.

Promises of High Return With Little or No Risk: A classic sign of fraud is a promise of good returns with little to no downside risk. Be particularly wary of “can’t- miss” opportunities or those promising “guaranteed returns.” There are always risks and potential downsides.
Unregistered Persons: Confirm that the person selling an investment is licensed and registered with state and federal regulators. Two good places to start are the Investment Advisor Public Disclosure database (www.adviserinfo.sec.gov) and FINRA’s BrokerCheck (brokercheck.finra.org).
Red Flags in the Financial Professional’s Background: Always check the professional’s background for past problems. These can include employment at firms that have been expelled from the securities industry, personal bankruptcy, termination, customer complaints, tax liens and repeatedly changing firms.
Pressure to Buy Quickly: A reputable financial professional will never pressure a person to make an immediate decision. Feeling pressured to buy is a sign to walk away.
Free Meals: Never purchase anything or open an account while at a seminar. Though some seminars are put on by reputable advisers and planners, fraudsters and high-pressure sales people use them to lure in prospective clients. You always have the right to walk out and should never feel obligated to pay for your meal.