How You Can Avoid Scams, Frauds, and Inappropriate Investments

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State of Oregon Division of Finance and
Corporate Securities

• How You Can Avoid Scams, Frauds, and
  Inappropriate Investments

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State of Oregon Division of Financeand
Corporate Securities

• Eric Kleinman
• Investor Information Coordinator
• [phone]
• dcbs.dfcsmail_at_state.or.us

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What We Will Cover Today

• The Division and the Program
• Types of Fraud and Targets
• What To Do Before You Invest
• What To Do After You Invest
• The Resources You Can Use

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State of Oregon Division of Finance and
Corporate Securities

• The mission of the Division of Finance and
  Corporate Securities (DFCS)
• To encourage the widest possible range of
  financial services, products, and information for
  Oregonians, delivered in a safe, sound, and
  fraud-free manner.

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The Division
The Division of Finance and Corporate Securities
Registers securities offerings Licenses brokerage
and investment advisory firms and their
salespeople Investigates violations of securities
laws Runs the Investor Information Program
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The Program
The Investor Information Program
Was established in 1998 Informs Oregonians about
securities laws and alerts them to fraudulent
schemes Is funded from fines and
settlements Works with other state, local, and
federal agencies to prevent fraud
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Types of Frauds and Targets
Definition of economic crime
Crimes committed for financial gain that depend
upon deception and fraud rather than violence or
physical force.
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Types of Frauds and Targets
Cost of investment fraud
Americans are defrauded out of 300 billion every
year by various scams Americans lose 40 billion
every year just to fraudulent investment
schemes.
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Types of Frauds and Targets
Warning signs that an investment may be a scam
High pressure sales techniques Promise of
guaranteed high returns Promise of a no-risk
investment Highly secretive insider tips The call
is from another state or the investment is
off-shore
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Types of Frauds and Targets
Warning signs that an investment may be a scam
No written information Request for your account
number(s) Unusual offers to facilitate
payment Offer of a free gift or trip
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Types of Frauds and Targets
The 2006 Dirty Dozen Potential Scams
1. Senior Investment Fraud 2. Variable
Annuities 3. Affinity Fraud 4. Internet
Fraud/Phishing Scams 5. Ponzi/Pyramid
Schemes 6. Fraudulent Charity Solicitations 7.
Viatical Settlements 8. Military Fraud 9.
Online Job Boards/At-Home Business
Opportunities 10. Grant/Lottery/Jury Duty Scams
(Pretexting) 11. Foreign Currency Exchange
(ForEx)/Prime Bank 12. TTY/Relay Operator Phone
Fraud
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Types of Frauds and Targets
Potential problems with legitimate investments
Misleading titles of sales persons Uninsured
investments sold in banks Confusing account
statements Proprietary or favored
funds Unsuitable for your objectives
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Types of Frauds and Targets
How Do Con Artists Con Us?
Appeal to some peoples greed Exploit some
peoples fear Intangible products Complex
products Con artists do not look like criminals
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Types of Frauds and Targets
Who can be the targets or victims? Perception
vs. Reality
Anyone with a phone, computer or mail box. People
living alone. People who say, I do not invest
or I dont have any money. People who are
looking to get rich quick.
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Before the Investment
Asking Questions That Keep You In Control
What is your name, your firms name and your
telephone number? How did you get my name and
number? Where is your office located? Are you and
your firm licensed to sell this security?
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Before the Investment
More Questions To Keep You In Control
Is the investment registered? Can you send me a
prospectus? What are the fees? What are the
risks? If I sold this today, how much would I
get? Can you provide references?
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Before the Investment
Even More Questions To Keep You In Control
How are you compensated for this sale? How long
have you sold this product, and do you have any
specialized designations? How does this
opportunity match my investment objectives? Can
you explain the investment opportunity
independently to a friend or relative?
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Before the Investment
General Financial Self-Defense Tips
Its OK to be rude! You can hang up, or leave
the office if youre uncomfortable. Dont be
embarrassed to ask questions. Never judge a
persons integrity by how they look, sound, or
dress. Watch out for those people in your life
who may be vulnerable to Con Artists.
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Before the Investment
Remember the 4 Cs
Compare with other investment options, Consult
with someone you trust, Call our division,
and Check out the salesperson!
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Before the Investment
Again, The Bottom Line Is
Make sure that you are comfortable with the
investment, and that it is suitable for your
financial objectives, your risk tolerance, and
your time horizon.
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After the Investment
Your investment responsibilities do not end once
you have selected a broker and an Investment
product. You need to
Keep your records in a safe place. Monitor your
account and investment holdings on a regular
basis. Be equally vigilant with each new
opportunity never let your guard down!
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After the Investment
If you feel that youve been the victim of an
investment scam
Contact the salesperson, broker, or manager. Do
not be embarrassed to report it. Do not delay in
reporting it. Contact our agency, and law
enforcement.
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After the Investment
Formal ways to resolve a dispute
Litigation Arbitration Mediation
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After the Investment
What is litigation?
Litigation is the act of instituting a legal
contest by judicial process.
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After the Investment
What is arbitration?
Arbitration is a process of dispute resolution in
which a neutral third party makes a decision
after a hearing where both parties have the
opportunity of presenting their case.
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After the Investment
What is mediation?
Mediation is an informal alternative to
arbitration. In this process, a neutral third
party helps disputing parties to reach an
agreement. Unlike an arbitrator, the mediator
has no power to impose a decision on the parties.
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Resources
Division of Finance and Corporate Securities 350
Winter Street NE, Room 410 PO Box 14480 Salem, OR
97301 main number [phone] toll
free number [phone] www.oregondfcs.org d
cbs.dfcsmail_at_state.or.us
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Resources
Oregon Department of Justice 1162 Court Street
NE Salem, OR 97301 [phone] (877)
877-9392 www.doj.state.or.us consumer.hotline_at_doj.
state.or.us
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Resources
Securities and Exchange Commission 450 Fifth
Street, NW Washington DC, 20549 (202)
942-7040 (800) SEC-0330 www.sec.gov help_at_sec.gov
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Resources
National Association of Securities Dealers Two
Union Square 601 Union Street Seattle, WA,
98101 [phone] [phone] www.nasdr.com
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Resources
North American Securities Administrators
Association 10 G Street NE Suite 710 Washington
DC 20002 [phone] www.nasaa.org info_at_nasaa.
org
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Resources
Federal Trade Commission 600 Pennsylvania Avenue
NW Washington, DC 20580 1-877-IDTHEFT www.consum
er.gov/idtheft
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Resources
Social Security Administration Fraud
Hotline [phone]
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Resources
Federal Reserve Bank Financial Literacy
Site www.FederalReserveEducation.org
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Resources
US Postal Inspector Fraud Line 1-800-275-8777 ww
w.usps.gov
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Resources
You are entitled to one free credit report each
year from each of the 3 major credit reporting
agencies. You can order them at www.annualcredi
treport.com
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Resources
Tom Martino Consumer Advocate/Radio
Personality www.troubleshooter.com
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Resources
Clark Howard Consumer Advocate/Radio
Personality www.clarkhoward.com
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The Wrap Up
The best prevention against abusive investment
schemes is a properly educated investor
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The Wrap Up
The best prevention against abusive investment
schemes is a properly educated investor Forewarned
is forearmed when Con Artists call
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The Wrap Up
The best prevention against abusive investment
schemes is a properly educated investor Forewarned
is forearmed when charming thieves call All
investments carry risk
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The Wrap Up
The best prevention against abusive investment
schemes is a properly educated investor Forewarned
is forearmed when charming thieves call All
investments carry risk Rarely does the victim of
a scam get any money back, so ask questions
before you write that check or sign any
agreements!