Ponzi Schemes - Top Tips to Watch Out For

Ponzi schemes aren’t just created by or high-profile target individuals you hear about on the news — Ponzi schemes can affect anyone. If you are investing, be on the lookout for the following signs if you are concerned about your investments.

You Have Little or No Risk and Constantly Get High Returns

While there is a degree of risk with every investment, any investment that results in a large return usually has a higher risk. If you are investing with little or no risk and consistently getting high returns, it could be a red flag that there is something else going on.

Paperwork Issues

You should be able to review all investment information in writing. If your investor is giving you pushback, that could be a warning sign. If there are also errors on your account statements or inconsistencies, this could mean that your funds aren’t being invested correctly.

Issues with Receiving Payments

If you are having problems receiving your payment or cashing out your investment, that could be another suspicion that a bigger issue is at hand. It’s important to note that Ponzi scheme promoters usually encourage those investing to roll over their funds rather than cash out and in turn promise higher returns. An investor can not make any promises so if your investor is doing this, it’s a significant red flag.

Sellers Who are Not Licensed

There are federal and state securities laws that require investors and their firms to be licensed or registered. Usually, a Ponzi scheme will involve unlicensed investors or unregistered firms. Make sure you can trace back where all your investments are going to ensure that you are not involved in any illegal activity.

Investments That are Unregistered

All investments must be registered with the U.S. Securities and Exchange Commission (SEC) or other state regulators. Being registered helps protect all involved because the SEC will have information about the investment company’s finances, management, products, and services. If your investor can not provide registration information, that is a consequential warning sign.

What To Do If You Have Concerns About Your Investments

At Weltz Law, we’re here to help if you have any questions about your investments. We have helped countless clients who were concerned about their investments, and we want to help you too. With offices located nationwide, we’re available to help you no matter where you’re located. Get started today with a free consultation — contact us online or at (877) 905-7671.