Indiana Secretary of State Connie Lawson has expanded the annual listing of nefarious financial products, practices and services that threaten to trap unsuspecting investors to include lurking dangers facing small business owners.
“With the delayed rollout of rules required by the JOBS Act, investors and small business owners alike must be on heightened alert for questionable investment offers and services,” Lawson stated.
Lawson said she is worried the recent lifting of an 80-year-old ban on the advertising of private offerings, mandated by the JOBS Act, will lead to greater abuse by unscrupulous promoters. The implementation of the JOBS Act also has created opportunities for unregulated third parties to provide ancillary services.
“Whether you are using a crowdfunding portal or an accredited investor aggregator, it is important to do your due diligence and to understand that use of an unregulated third party to provide such services does not change your obligations under federal and state securities laws,” Lawson stated. “Investors are not alone in their potential to be scammed. Using a fraudulent portal means both the business and the investor stand to lose.”
Lawson reminded investors to independently verify any investment opportunity as well as the background of the person and company offering the investment. The Secretary of State’s Securities Division provides detailed background information about those who sell securities or give investment advice, and about the products being offered.
“You wouldn’t trust your health to an unlicensed doctor, so why jeopardize your financial health by trusting your hard-earned money to an unlicensed broker or investment adviser?” Lawson stated.
For more information, visit www.in.gov/sos/securities/files/2013_Top_Threats_Facing_Investors.pdf.
The 2013 list of the Top 10 financial products and practices that threaten to trap unwary investors and small business owners include: Persistent threats – private offerings, real estate investment schemes, high-yield investment and Ponzi schemes, affinity fraud, scam artists using self-directed IRAs to mask fraud, and risky oil and gas drilling programs; New investor threats – proxy trading accounts and digital currency; and New small business threats – capital-raising pitfalls and unregulated third-party service providers.
Source: North American Securities Administrators Association Enforcement Section