Wednesday, August 4, 2010



Do your homework! Spend some time investigating the background of the promoter. Ask the promoter which regulator has issued their license and if it has ever been suspended or revoked. Follow up on their response by speaking with your state, county or city securities office to locate the licensing/registration documents. 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.

It is important to know that anyone selling a security must have a license. A legitimate salesperson will be registered with the Financial Industry Regulatory Authority (“FINRA”), The Securities and Exchange Commission (“SEC”) or a state securities regulator. If the person claims to be exempt, you may follow up with your regulator’s office, but more than likely it is best to thank them for their time and walk away. The Financial Industry Regulatory Authority even offers a Scam Rating and Risk Rating Questionnaire at to assist in fraud evaluation. 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.

Request an onsite visit to the advisor to see the company’s operations and meet with their employees. A Ponzi scheme promoter will not want his fraudulent behavior exposed so they will most likely have very few to no employees. Be wary of someone that opens their own mail and answers their own calls, as it lessens their likelihood of being caught in a scam. Also, note that when the perpetrator is close to being exposed, it will be more difficult to get in touch with them.

No comments:

Post a Comment