Securities Fraud—A Basic Overview
The nation's economy is increasingly dependent on the success
and integrity of the securities and commodities markets. As
a result, the FBI diligently investigates criminal activity
in the markets and against investors whenever it arises.
Definition
The term Securities Fraud covers a wide range of illegal activities,
all of which involve the deception of investors or the manipulation
of financial markets.
The
Top Schemes
- High Yield Investment Fraud
- Ponzi Schemes
- Pyramid Schemes
- Advanced Fee Schemes
- Foreign Currency Fraud
- Broker Embezzlement
- Hedge Fund Related Fraud
- Late Day Trading
Common Scams—Be on the Lookout for Fraud
High Yield Investment Frauds
- Characterized by promises of high rates of return with
little or no risk.
- May involve various forms of investments (e.g. securities,
commodities, real estate, precious metals, etc.)
- "Too good to be true” investment opportunities.
- Perpetrators may contact victims by telephone, e-mail,
or in person.
- The offers are generally unsolicited.
Ponzi & Pyramid Schemes
- Use money collected from new victims to pay the high rates
of return promised to earlier investors.
- Payouts give the impression of a legitimate, money-making
enterprise behind the fraudster's story.
- In reality, investors are the only source of funding.
Advance Fee Schemes
- Victims advance relatively small sums of money in the
hope of realizing much larger gains.
- Gains never materialize because there is no legitimate
underlying investment.
- To participate a particular investment opportunity, victims
must first send funds to cover “taxes” or “processing
fees.”
- After victims send the “fees,” the perpetrators
appropriate the funds and never deliver on the investment.
Protect Yourself—How You Can Avoid
Becoming a Victim
Identify the warning signs
- Does the offer sound too good to be true?
- Is the seller using high pressure sales tactics?
- Was the investment offer unsolicited?
- Did the seller ask for information that is usually considered
personal (e.g. social security number, credit card information,
etc.) over the phone or Internet?
- If you answer “yes” to any of the above questions
when considering an investment opportunity, you may be the
target of a scam artist.
Take action to avoid fraud
- Don’t believe everything you are told by the seller.
Take the time to do your own research on the investment’s
potential.
- Don’t assume the solicitor is who he or she claims
to be.
- Check with federal and state securities regulators to
find out if there have been any complaints against the company.
- Ask the promoter whether—and how much—he or
she has been paid to tout the opportunity.
- Ask where the company is incorporated and then call that
state to ensure that the company has a current annual report
on file.
- Request written financial information, such as a prospectus,
annual report, offering circular, or financial statements,
then compare the written information to what you were told.
- Get offers in writing and save a copy for your records.
- Check with a trusted financial advisor, your broker, or
an attorney about any investments you are considering.
Report scams when they occur
- Don’t be embarrassed.
- File a complaint with the Securities and Exchange Commission,
state securities regulator, or a law enforcement agency.
- Report the crime promptly—you’ll have a better
chance of getting your money back if you do.
Statistical Accomplishments
Securities and Commodities Fraud
|
|
2003 |
2004 |
2005 |
2006 |
Pending Cases |
937 |
987 |
1139 |
1160 |
Indictments |
342 |
392 |
323 |
257 |
Convictions |
260 |
304 |
361 |
236 |
FBI Agents |
122 |
126 |
138 |
157 |
FBI Field Office
Contact Information.
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