Watch Out for These New Types of Ponzi Schemes: Securities Fraud
A Ponzi scheme is a type of fraud where the perpetrator gains money by promising investors high returns. The scammer will take any funds received and pay off early investors with those funds instead of investing them as promised to generate profits. This means that when new investments come in, there are none left for them, so they too become victims and lose their investment.
A New Type of Ponzi Scheme has recently emerged called securities fraud which can be defined as “the purchase or sale of a security without disclosing material facts about the security.” This post will explore how securities fraud is turning into a new type of Ponzi scheme.
The purchase or sale of any security without disclosing material facts about the security to investors may be considered securities fraud. It can lead to serious consequences for both perpetrators and victims. The SEC offers some guidance on potential red flags that someone could use as an investor in screening for these types of scams. We hope you find it helpful!
How To Identify Securities Fraud?
There are many different types of securities fraud, but there are some general things to watch out for.
You should always be on the lookout for stocks with unusually high daily volume and limited information about who is selling them or where they’re coming from. If you see a company whose stock price has skyrocketed in just one day, this could also indicate potential securities fraud activity. Also, look out for companies with no recent news releases or filings.
How To Avoid Securities Fraud?
Of course, it’s not easy to avoid security fraud entirely because people often try to keep their schemes under wraps while still advertising new opportunities online and through social media channels like Twitter or Facebook. However, if you invest carefully, you can protect your money.
Just in case you suspect that your broker recommended you specific securities that seem fraudulent, consider talking to a skilled investment fraud attorney like Erez Law in your area and take legal action without wasting any time to recover your money.