Thursday, May 20, 2010



To save yourself from falling into the clutches of a Ponzi Scheme, it is important to do your homework and review an investment with a comfortable level of skepticism. Request a copy of the promoter’s license in order to confirm you will be entrusting your hard earned funds to someone legitimate. Check their credentials to see if they have ever had their license suspended or revoked. Speak with your state, county or city securities regulator to confirm the answer. The number for your state securities regulator can be found in the government section of your local phone book or by speaking with the North American Securities Administrators Association at (202) 737-0900. A legitimate salesperson will be registered with the Financial Industry Regulatory Authority (“FINRA”), The Securities and Exchange Commission (“SEC”) or a state securities regulator. To verify a broker’s license and registration, including whether or not they have ever had a complaint filed against them, contact BrokerCheck at (800) 289-9999. Investment advisors can be verified by the SEC’s Investment Advisor Public Disclosure website at Additionally, to check on an insurance agent, you can speak with your state’s insurance department, which can be located through the National Association of Insurance Commissioners (“NAIC”) at Individuals that are sellers should be investigated through your state securities regulator.


A diversified investment portfolio will keep you protected from completely emptying your pockets should you somehow invest funds in a Ponzi Scheme. No one enjoys losing money, but through proper diversification you suffer a much smaller blow. By spreading out your investments, it will be a softer pain to lose 5% of your funds than your life savings. No matter how good an investment may appear to be doing, the safest security measure is not to put all of your money in one place.


Ponzi Schemes have become a pandemic cause for concern due to the state of our current economy. Hopefully, this article has provided you with several elements that you will put to use to guard your finances. It is easy to fall victim to venom without knowing proper keys for detection and avoidance. Secure your savings with dynamic diversification, a sense of skepticism, heeding your homework and avoiding overpromised payouts.

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