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Jun 17, 2015 by |

Red Flags of Investment and Securities Fraud


Seniors are frequently victims of investment fraud, according to California securities fraud lawyers. The Securities and Exchange Commission’s Office of Investor Education and Advocacy provides some advice and basic rules about investment offers to avoid, and how to identify potentially fraudulent investment opportunities. Before choosing an investment, seniors should look out for the following five “red flags.”

First, they should pay attention to promises of a high rate of return with little or no risk, as any investment implies some risks. Offers that seem “too good to be true” usually are, say California securities fraud lawyers.

They also have to watch out for unregistered persons. Investors should check if the person or the company which is selling them an investment is registered and licensed, as many elderly people are victims of securities fraud by unregistered and unlicensed persons. There are free resources to check the background of individuals and firms selling investments, including the SEC’s Investment Adviser Public Disclosure (IAPD) online database and the Financial Industry Regulatory Authority (FINRA)’s BrokerCheck online database. Seniors can contact their state securities regulator as well.

Investors should also look out for red flags in the financial professional’s background. These red flags can include employment at firms that have been expelled from the industry, personal bankruptcy, termination, repeatedly moving firms, being subject to internal review by an employer, a high number of customer complaints, federal tax liens, and failed industry qualification examinations.

Senior investors should also be careful of sellers who put too much pressure on them to make an investment as quickly as possible. Reputable sellers should give clients some time to think about their investment opportunities and do some research.

“Free lunch” investment seminars are another potential scam that senior investors should be wary of, as their purpose is to attract potential clients and make them buy investment products. Seniors who decide to attend this type of seminar should commit themselves to not purchase anything or open an account while at the seminar.

Additional Resources:
-The SEC’s Office of Investor Education and Advocacy can be reached at (800) 732-0330. Investors can also ask questions by using this online form:
– A Guide For Seniors: Protecting Yourself Against Investment Fraud.
– Social Media and Investing: Tips for Seniors.
– “Free Lunch” Investment Seminars: Avoiding the Heartburn of a Hard Sell: A FINRA Investor Alert about “free lunch” investment seminars.
-Ask Questions: Questions You Should Ask about Your Investments
Investors can also order hard copies of the SEC’s free publications by calling (800) 732-0330, or access them on the Internet through the SEC’s website

Evans Law Firm, Inc., handles all types of securities fraud cases, including SEC and IRS fraud, and FINRA arbitrations. If you have a securities or investment fraud claim, please contact Evans Law Firm, Inc. at 415-441-8669 or via email at

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