NASAA Identifies Investments Most Likely to Cause Harm in 2015

The North American Securities Administrators Association has named what it believes are the financial products that pose the greatest threat to investors. The group said that a lot of these dangers involve new products employed in classic financial scams, some propelled by the Internet. Many involve unlicensed agents seeking to sell unregistered products.

The Investments That NASAA Says Pose the Greatest Emergent Threats:

Binary Options: These are securities as options contracts with a payout that is dependent on whether the underlying asset goes up or down in value. These typically have an all-or-nothing payout structure that either gives an investor a pre-determined amount of money if the asset’s value goes up or nothing at all if it goes down. The latter option can place an investor at risk of losing the entire investment. Related risks may include illegal distributions, promotional scams, identity theft, purposely created losing trades, and the use of online trading platforms that do not comply with regulatory requirements.

Marijuana Industry Investments: Marijuana, now legal in the District of Columbia and 23 states for medicinal purposes, has become a favorite investment for scammers in pump and dump scams. A lot of promoters are trying to capitalize on this new market. They are marketing and selling investments in companies that sells services and products to the marijuana industry. However, many of the companies micro-cap companies selling securities at low prices even thought the investments are extremely speculative and come with a lot of risks.

Stream-of-Income Investments: This involves investors purchasing monthly pension or disabilities payments belonging to individuals. However, because the seller typically keeps the legal right to redirect the payment, an investor could end up with an unenforceable contract right. Also, benefits are dependent upon the seller’s life. If a life insurance policy is cancelled, the investor has no protections.

Digital Currencies: There is the danger of promoters trying to illegally offer securities linked to digital currencies. Legitimate offerings linked to these currencies also come with considerable risk, including volatility and the threat of hackers.

NASAA also identified a number of ongoing threats to investors, including including Ponzi scams, Pyramid schemes, Regulation D offerings, affinity fraud, Internet fraud, real estate scams, and promissory note fraud.

NASAA also recently put out a report on enforcement statistics for last year. Per the report, state regulators took on 2,184 enforcement actions, imposed $75 million In penalties and fines, ordered $616 million in restitution for investors, and doled out 1,816 years of time behind bars. There was also an increase in enforcement actions against both registered broker-dealers and licensed investment adviser representatives. One reason for the latter is the move of advisers with $100 million in assets under management from the Securities and Exchange Commission to state oversight.

Please contact our securities fraud lawyers today. Your initial case consultation to find out whether you have grounds for a claim is free.

Top Investor Threats, NASAA

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