Investments take risk; sometimes a little, sometimes a lot. But smart investors know that the best way to minimize risk is to educate yourself about your basic rights, the protections you are entitled to under the law, and the common scams and frauds to avoid. Better Business Bureau of Southern Arizona has teamed up with the FINRA Investor Education Foundation to bring you up-to-date research and tools on investment fraud at BBB Smart Investing.
Studies have shown that investment scams have risen in the last decade. Baby Boomers are managing their own retirement funds and are particularly vulnerable. In 2011, according to the North American Securities Administrators Association (NASAA), state and provincial regulators in the U.S., Canada and Mexico launched more than 2,600 administrative, civil and criminal enforcement actions involving investors, 1 in 5 of whom were seniors.
The Financial Industry Regulatory Authority (FINRA) suggests three key steps to take before investing:
Check out the seller. A legitimate investment professional must be licensed. Before giving out your personal information, ask whether the seller is registered with FINRA, the Securities and Exchange Commission (SEC) or your state securities regulator. Find registration and other information on individual brokers, securities firms and investment advisor firms at: www.SaveAndInvest.org/CheckSeller.
Ask questions. Are you licensed to sell this investment to me? Is this investment registered with the SEC?
Check out the investment. Check whether the investment itself is registered. Confirm whether a security is registered with the SEC and get access to a company’s financial information by using the SEC’s EDGAR Database. Learn how at www.SaveAndInvest.org/CheckInvestment.