Scandalous Investment Schemes: Is Your Business at Risk?

Recent economic conditions have made investment fraud a very prominent problem among small businesses. These businesses, often looking to recoup losses they incurred in their investments or to their company retirement accounts are being swayed by con-artist financial advisers that are more interested in their own bottom-line than the security of the investments they are offering.  Four of the most common fraudulent schemes out there consist of familiar sounding phrases.

1) Exchange Traded Funds   Commonly known as ETF’s, these funds carry a very high risk to any investor. Most ETF’s consist of very volatile and exotic financial products that would not be the first choice of any low-risk investor. Additionally, these brokers or advisers often fail to tell the small business that an ETF is often not able to be liquidated at short notice in the event that the company needs to raise quick cash.c

2) ForEx   ForEx is the slang term for Foreign Exchange trading. This type of trading deals with buying and selling foreign currency against each other for a profit. Most people do not understand how ForEx works, including most brokers. This type of investment is classed as very high-risk.


3) Precious Metals  As many people know, gold and silver prices have skyrocketed since the beginning of the recession. This has spurred many financial advisers to recommend purchasing gold products. However, most investors are unaware that gold is sold in many different ways and at different values. Gold bullion, for instance, is priced differently than gold coins. Likewise, gold stock certificates in a mine are much different from investing in jewelry grade gold. Most advisers encourage gold investments because they are very high-commissioned sales, not because they are beneficial to the buyer. Additionally, many people believe they “own pure gold,” when in fact they only own gold coins.

4)  Energy Schemes   Whether it is oil and gas investments or green technologies, most of these schemes are considered very risky. Many of these schemes are for start-up capital or new ventures that have no proven track record.

5)  Fraudulent Association  Advisement of an investment fraud lawyer is recommended if these situations arise, as they are some of the most common ways fraudulent transactions are committed.  Brokers “associate” themselves with a large company, even though there is no connection between the entities. The business owner assumes the investment proposal is valid because of the association.

6)  Special Deals   Think of a Ponzi scheme and you will understand this ploy. These sellers offer an investment deal that they are only willing to offer to specially selected investors.

7)  Off the Books  These deals are not only risky, they are illegal. The adviser offers you an investment opportunity that they are “aware of” even though it is not coming through their investment firm.

The best way to avoid fraudulent acts by financial advisers is to do diligent research about the investment, the company offering the deal, and the adviser themselves if necessary. If you find that you have been a victim of one of these schemes, or believe that you are a victim of another type of investment scheme, you are encouraged to seek the professional services of a fraudulent investment attorney.

Ann Bailey contributes business articles relating to investment processes.  The preemptive advice of an investment fraud lawyer like Page Perry, an Atlanta based specialist in guiding investors, could help small business owners protect themselves from unscrupulous financiers preying upon sound investment hopes of business owners everywhere.

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