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    NASAA Announces Top Investor Threats for 2020

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    The North American Securities Administrators Association (NASAA) today announced the top five products or schemes likely to trap investors in the coming year and recommended steps investors can take to protect themselves from fraud.

    NASAA surveyed its members, the state and provincial securities regulators throughout the United States, Canada and Mexico, to identify threats investors are likely to see in 2020. Based on investor complaints, ongoing investigations and current enforcement trends, the securities regulators identified promissory notes, Ponzi schemes, real estate investments, cryptocurrency-related investments and social media/Internet-based investment schemes as the top five areas of concern for the coming year.

    “It is important for investors to understand what they are investing in and who they are investing with. Don’t fall for promises of guaranteed high returns with little to no risk or deals pitched with a false sense of urgency or limited availability,” said Christopher W. Gerold, NASAA President and Chief of the New Jersey Bureau of Securities. “Before you ring in the New Year, make a resolution to protect your money from fraudulent investments and those who may be trying to fleece you.”

    Investment offers that sound “too good to be true” often share similar characteristics. The most common telltale sign of an investment scam is an offer of guaranteed high returns with no risk. All investments carry the risk that some, or all, of the invested funds could be lost. “Anyone who says their investment offer has no risk is lying,” Gerold said. “No one can guarantee an investment return.”

    Many of the threats facing investors involve private offerings, which are exempt from federal securities registration requirements and are not sold through public stock exchanges. “Unregistered private offerings generally are high-risk investments and don’t have the same investor protection requirements as investments sold through public markets,” Gerold said.

    Investors should always ask if the salesperson and the investment itself are properly licensed or registered. This information can be confirmed by state and provincial securities regulators. Working with a properly licensed investment professional affords investors certain legal protections. “For the same reasons you wouldn’t go to an unlicensed doctor or dentist, you should avoid unregistered investment salespeople and their products. Anyone offering to sell a security without a license is breaking the law and should be avoided,” Gerold said.

    “Regardless of how long you have known a person or been conducting business with an individual, it’s worthwhile to do a quick check to confirm their license and compliance history is up to date,” Gerold said. “People spend more time reading hotel reviews than they do checking an investment offer or the background of the person selling it. Remember if it sounds too good to be true, it usually is.”

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