How to Avoid Investment Fraud
How to Avoid Investment Fraud
January 02, 2019
There are many avenues to pursue justice after falling victim to a fraudster for misappropriating funds, both criminally and civilly; however, the ideal situation is to avoid investment fraud all together. Per the US Securities and Exchange Commission there are six strategic steps to consider prior to investing:
- Inquire. Investigate before you invest. As an investor you must inquire and do your own investigation prior to investing funds. Seek out references, ask questions, know the history of the proposed opportunity and retain expert services when needed to complete an adequate due diligence check
- Research.Understand a company’s business and its products or services before investing. Ask to see any completed feasibility studies completed on the product or services. Look for the company’s financial statements on the SEC’s EDGAR filing system. Retain an independent auditor to complete and audit and opine as to the financial solvency of the business.
- Know the Parties Involved. Look into all the parties involved in the transaction prior to transferring funds. This includes the seller, the business itself, etc…
- Scrutinize with Extra Caution Unsolicited Offers. Be especially careful if you receive an unsolicited pitch to invest in a company, or see it praised online, but can’t find current financial information about it from independent sources.
- Protect Yourself and Your Assets. When entering a transaction be cautious of the manner in which you hold the investment.Whether you are investing in your personal capacity, forming an entity for investment purposes, look into how are you are expected to execute contracts in the proposed transaction.
- Be Aware of Common Fraud Traps. Make yourself knowledgeable about different types of fraud and red flags that may signal investment fraud.
https://www.investor.gov/protect-your-investments/fraud/how-avoid-fraud/what-you-can-do-avoid-investment-fraud
