Business

State lists 10 popular investment scams

The state Department of Financial Institutions this week released its annual list of traps that can ensnare investors.

"The best three ways to fight investment fraud are knowledge, attention to detail and a healthy sense of skepticism," said Securities Division Director Shonita Bossier in a statement. "State securities regulators can provide detailed background information about those who sell securities or give investment advice, as well as about the products being offered."

Investors can call the DFI at 1-800-223-2579 to check out brokers or advisers.

The 10 products and practices it warns consumers to be wary of are:

Exchange-traded funds: These funds, which sometimes resemble mutual funds, are volatile and may not be ideal for common investors.

Foreign-exchange trading schemes: "Trading in foreign currencies requires resources far beyond the capacity of most individual investors," according to the DFI.

Gold and precious metals: Sellers sometimes offer to keep gold and sell it at higher prices although the gold may not exist.

Green schemes: Scams involving development of clean-energy technologies are becoming more popular.

Oil and gas schemes: These risky propositions are not ideal for smaller investors who cannot afford the risk.

Affinity fraud: Scam artists sometimes claim to be associated with a legitimate group.

Undisclosed conflicts of interest: Some financial salespeople receive incentives to sell risky products, so be sure to ask how their compensation is structured.

Private or special deals: Those approached for such deals should be wary, as they're not subject to the same review as public investment offerings.

"Off the books" deals: Some brokers pitch "off the books" deals that aren't supervised by their employers and may be illegal.

Unsolicited online pitches: Investment offerings are now often made online at sites like Facebook and Twitter. The DFI warns that investors should review unsolicited offers carefully.

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