The PIABA Foundation

Promoting Investor Education

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Protect Yourself

Protect Yourself From Becoming A Victim of Securities Fraud

Don't be a "courtesy victim". You may have been taught to be courteous at all times to phone callers and people who visit you at home. Some people will not hesitate to exploit the good manners of a potential victim. When a stranger asks for your money, you should proceed with the utmost caution. You are under absolutely no obligation to stay on the telephone with a stranger or allow them in your home. In these circumstances, it is not impolite to explain that you are not interested and hang up the phone or ask a stranger to leave your premises. If you are lonely and in need of companionship, don't make the mistake of seeking it from someone whose only real interest may be to get his or her hands on your money.

Say "no" to anyone, even an investment professional, who presses you to make an immediate decision. Before investing check out the salesperson, firm and the investment opportunity itself. Background information on investment salespeople and firms is available for free by contacting FINRA (BrokerCheck) or your State Securities Regulator. Almost all investment opportunities must be registered for sale in the state in which you live, and your Regulator can tell you if the investment opportunity is properly registered. Before you part with your hard-earned savings, get written information about any investment opportunity, review it carefully, and make sure that you understand all the risks involved.

Always stay in charge of your money. An individual who wants your money may be more than happy to assure you that he or she can handle everything, thereby relieving you of the need to watch over and protect your nest egg. Beware of anyone who suggests putting your money into something you don't understand or who urges that you leave everything in his or her hands. Constant vigilance is a necessary part of being an investor. If you understand little about the world of investments, take the time to educate yourself or involve a family member or a professional, such as your banker, before trusting a stranger who wants you to turn over your money and then sit back and wait for results.

Watch out for people who prey on your fears. Salespeople know that many Americans worry they will either outlive their savings or see all of their financial resources vanish overnight as the result of a catastrophic event, such as a costly hospitalization. They often pitch schemes as an opportunity for you to build up life savings to the point where such fears are no longer necessary. Remember that fear and greed can cloud your good judgment and leave you in a much worse financial posture. An investment that is right for you will make sense because you understand it and feel comfortable with the degree of risk involved.

Don't let embarrassment or fear keep you from reporting investment fraud or abuse. People who fail to report that they have been victimized in financial schemes often hesitate out of fear or embarrassment that they will be judged incapable of handling their own affairs. Some senior citizens have indicated that they fear their victimization will be viewed as grounds for forced institutionalization in a nursing home or other facility. If you think you have been the victim of investment abuse, the sooner you seek help, the greater the chance of stopping the fraud and regaining some of your lost money.

Beware of "reload" schemes. Most older victims have a finite amount of money that is unlikely to be replenished in the event of fraud or financial abuse. The result is a panic that is well known to those who have developed schemes to take a "second bite" out of senior citizens who already have been victimized. Faced with a loss of funds, some senior   citizens will go along with another scheme (allowing themselves to, in effect, be reloaded) where a promise to make good on the original funds that where lost, and possibly even generate new returns beyond those originally promised, is made. When a significant loss occurs seek help before reinvesting more money.