Following in the wake of Hurricane Sandy and tonight’s projected Nor’Easter which is expected to hit many of the areas already devastated by Hurricane Sandy, there will be many scams as scam artists and identity thieves attempt to further victimize the victims of the storm. I have already warned you about the scams involving phony contractors, phony FEMA representatives, phony insurance adjusters and phony charities, but with history as a guide, you should also be wary of the next round of scams which will take the form of scam investment opportunities. As previously happened following Hurricane Katrina, you can expect to receive emails and other communications offering to let you in on fool-proof investments in companies that have developed products or are providing services that will be part of the massive clean-up and reconstruction of the storm affected areas. These investments may be in a revolutionary new type of generator, a water-removal system or other storm related technologies or products. Many of these investments will be scams and you should be very careful before making private investments.
First you must 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.