The number of people investing in securities and commodities has been on the rise by over 600 per cent since 1980. Unfortunately, accompanied with the growth is an increase in fraud in the financial market.
Anybody can be a victim of securities fraud. However, not every investor knows what it means, how to recognize or prevent it.
What is Securities Fraud?
Securities fraud also known as investment or stock fraud is any type of deceptive practice that can be committed in a variety of forms but basically involves misrepresenting information to induce investors’ decisions. It can be committed by independent individuals through various schemes like insider trading. Individuals such as a broker or an organization, such as a corporation, brokerage firm or investment bank can also initiate securities fraud.
How to avoid falling victim to securities fraud
· Research before you invest
You should not use unsought emails, company news releases, message board postings as a sole basis for your investment decisions. You should endeavour to critically research a company before placing a dime in their care. Search for the company and read reviews on Reviewsbird.co.uk. You can also check out some stock companies’ reviews.
· Be wary of unsolicited or “too good to be true” offers
Be careful especially if you see a company praised online or you receive an unsolicited offer from companies but you can’t find tangible information about it from verified sources. Be wary when you are introduced to or come across “too good to be true” offers. You should compare the promised yield with well-known stock indexes. Any investment that claims that you will receive more than the normal yields could be highly risky which means you might lose your money.
· Always ask questions and get straight answers
You should not be afraid to dig around for information if you want to know more about an investment opportunity. Ask the company or sales agent direct questions and always get straight answers – fraudsters have little or no incentive to set you straight. If you are not quite getting the answers you want, consult verified financial experts for more information about the company or agent.
· Take all the time you need
Get suspicious of high-pressure salespeople with time-limited offers. Invest at your own pace; if the investment is a legitimate one, then there is no need for you investing at the spot. Take all the time you need to make the best and informed decision.
· Increase your knowledge
Always make yourself knowledgeable of the different types of securities fraud and red flags that may signal one. By so doing, you are ensuring you don’t fall for one.
In conclusion, fraud is everywhere and comes in different forms. Anybody can be a victim of securities fraud. Nonetheless, to reduce the chances of being a victim, then we have to be more conscious. However, if you happen to fall victim, you should not be ashamed to report to the appropriate authorities.