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Investor Fraud

On Behalf of | Dec 16, 2022 | Business, Business Litigation

Suppose you are considering investing in an asset or are a long-time investor. In either case you should be aware of investor fraud, which is a crime and can result in severe legal consequences. There are types of investor fraud; some are widely known, while others are less known, making people more prone to fall for them.

Why invest in the first place?

Our society benefits from the securities and commodities market. It plays a vital function in our national economy if these investments are legal. The United States government has multiple departments dedicated to cracking down on investor fraud in all of its forms.

What are the types of investor fraud?

There are diverse types of investor fraud. Two of them are explained below.

  1. Ponzi schemes: a Ponzi scheme lures investors to pay money into a fund, which is used to pay the older investors. Ponzi schemes are fraudulent because the funds are not invested but circulated within the “pyramid.”
  2. Foreign currency trading: This investment offers an opportunity to buy or sell foreign currency at a fixed price. These investments can be legitimate for governments or experienced large-scale investors but are often not ideal for the average investor because of their complex nature.

These are only two examples of investor fraud and there are many others. Before investing your money consider whether you fully understand what you are investing in, or seek help to understand it better.

Does this mean I should not invest my money?

Not at all. As noted above, the securities and commodities market plays a fundamental role in our economy. Educating yourself is key to understanding how investments work and how to stay on the right side of the law.

Be that as it may, there will always be those who abuse the law, so it is critical to remain informed of the many illegal schemes that could get you into trouble.