Top investor threats for 2015 include Bitcoin, marijuana-related schemes

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Some of the emerging threats facing investors next year include schemes involving binary options, marijuana-related businesses, stream-of-income investments and digital currency.

Antrenise Cole

Reporter- Birmingham Business Journal

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The Alabama Securities Commission has announced the top threats for investors in 2015.

Some of the emerging threats facing investors next year include schemes involving binary options, marijuana-related businesses, stream-of-income investments and digital currency.

"Many of the top threats facing investors involve new products in classic schemes," said ASC Director Joseph Borg. "We are seeing past threats to investors morph into new or altered dangers, many fueled by the Internet. Overarching all of these threats are unlicensed agents selling unregistered products to unsuspecting investors."

The ASC cautions potential investors to thoroughly scrutinize and research any investment opportunity or offer. It encourages investors to contact its organization to report suspected fraud or to obtain consumer information.

The persistent threats are ponzi and pyramid Schemes; affinity fraud; real estate schemes, including those using promissory notes; Regulation D of Rule 506 on private offerings; and oil and gas investments in the "fracking" era; and Internet fraud, including social media and crowdfunding, ASC said.

"It cannot be said enough that investors should independently verify any investment opportunity as well as the background of the person and company offering the investment," Borg said. "It pays to investigate before you invest."

Here is more information about the top emerging threats facing investors, according to ASC, which cited the Enforcement Section of the North American Securities Administrators Association:

• Digital currency and cybersecurity risks - Unscrupulous promoters may be attempting to capitalize on this trendy way to pay for goods and services by illegally offering securities tied to digital currencies, like Bitcoin.
• Stream-of-income investments, such as pension payments or government disability payments - These investments can carry significant risks as laws may prohibit the assignment of the stream of income/benefits, the seller typically maintains the legal right to redirect the payment, and if the seller does redirect the payment, the investor may be left with an unenforceable contract right.
• Binary options, which are securities in the form of options contracts that have a payout that depends on wither the underlying asset increases or decreases in value - Particular investor risks are that the option is an all-or-nothing payout structure and investors can easily lose their entire investment.
• Marijuana industry investments - Many promoters have seized upon this to market and sell investments in the marijuana industry, including investments in companies that provide products and services to the marijuana industry, such as vaporizers, hydroponic supplies, lighting systems and security systems. Many of these companies are micro-cap companies selling low-priced securities which typically are highly speculative and carry a high degree of risk for investors.

Antrenise Cole covers banking, finance, small business lending, venture capital, accounting and law for the Birmingham Business Journal. Click here to follow her on Twitter.