Scam of the day – July 2, 2016 – Brexit scams

The economy in general and the stock market in particular react to fear and greed.  The recent Brexit (British Exit) vote of Britain to leave the European Union (EU) has led to a great deal of fear as reflected in the initial tremendous drops in the stock markets around the world.  It also is leading people to be vulnerable due to both fear and greed to the entreaties of scammers offering investments purporting to take advantage of the situation created by Britain leaving the EU.  Fear and greed are scammers best friends because they make people into easier targets.  Scammers are always ready to take advantage of every major event that happens and turn it into an opportunity to scam people and the Brexit vote is no exception.  Scammers are already contacting people with investment “opportunities” to take advantage of their concern about Britain leaving the EU.

TIPS

Before you consider any investment in response to an email, text message or phone call, you should first ask yourself, why is this stranger contacting me to invest in this fool-proof investment that is guaranteed to deliver a huge profit?  You should also never underestimate the power of a fool.  Nothing is fool proof and no investment can guarantee a huge profit.    Before investing with anyone, you should investigate the person offering to sell you the investment with the Securities and Exchange Commission’s Central Registration Depository.  This will tell you if the broker is licensed and if there have been disciplinary procedures against him or her.  You can also check with your own state’s securities regulation office for similar information.  Many investment advisers will not be required to register with the SEC, but are required to register with your individual state securities regulators.   You can find your state’s agency by going to the website of the North American Securities Administrators Association.   You should also check with the Financial Industry Regulatory Authority (FINRA) for information about the particular  investment adviser.  It is also important to remember that you should never  invest in something that you do not completely understand.  This was a mistake that many of Bernie Madoff’s victims made.  You also may want to check out the SEC’s investor education website at www.investor.gov.  Scammers can be very convincing and it may sound like there is a great opportunity for someone to make some money, but you must be careful that the person making money is not the scam artist taking yours.

Too many people invest without doing their homework and end up losing money to scams.  Homework wasn’t fun when you were in school and it isn’t fun now, but it is important to do before investing in anything.