Identifying a Ponzi Scheme

Protecting Investors from Ponzi Schemes

A Ponzi scheme is a type of securities fraud that can be an expensive trap to fall into. However, there are ways to identify a Ponzi scheme, and can help make you a more well-informed investor.

Ponzi Scheme Characteristics

  • Unclear Investments
    Understand your investments. Review written information about an investment, and stay away from investments that you don’t understand or that your investment advisor cannot explain.
  • Promises of High, Consistent Returns
    All investments involve some degree of risk, and investments that seek high returns typically take even greater risks. Be skeptical of anyone who promises consistent, high returns on your investment, as those types of returns are difficult to consistently achieve in the marketplace.
  • Unregistered Investments
    According to the Securities Act of 1933, companies are required to register securities to help investors make informed investment decisions. When investing, beware of those investment opportunities that are not registered with federal or state regulators.
  • Unlicensed Advisers and Firms
    Investment professionals and firms are required to register with federal and state agencies. Before investing, be sure to ask for your adviser’s investment credentials. Be prepared to invest elsewhere if your adviser is unable or unwilling to provide that information.
  • Accounting Problems
    Be suspicious of any accounting errors in your statements, or if you have trouble withdrawing funds from the investment. These can be sign of fraudulent accounting and investment practices.

Victim of a Ponzi Scheme? Speak with a Securities Attorney

If you are concerned that you are involved in a Ponzi scheme, contact our securities attorneys by filling out the form to the right or by calling (866) 981-4800.

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