This week’s CBTV show is entitled, “Beat the Heat – When That ‘Hot’ Investment Deal Leaves You Burned!”
I really believe the following information can help you avoid frauds and Ponzi schemes, and become a wiser investor:
The Dodd-Frank Wall Street Reform and Consumer Protection Act celebrated its one-year anniversary on July 21st, corresponding with the recent passage of “whistleblower” protection and a “bounty-hunter” reward program. Each of these bills are designed to incentivize anyone who has inside information about a publicly traded company who is violating securities laws. Without fear of retaliation, they can now report such violations to management, and the Securities and Exchange Commission. As a financial incentive, if a whistleblower provides a high-quality tip that leads to a successful enforcement action, they will be awarded 10 to 30% of any amount over $1 million dollars recovered, from a judicial or administrative action against the accuser.
While millions of Americans are looking for that next hot investment in an otherwise cold economy, it has become increasingly important to resist the temptation to make a quick buck, so you will avoid getting burned. While the Dodd-Frank Wall Street Reform and Consumer Protection Act attempts to further protect consumer’s rights, the full effect may not be felt by consumers for years to come. Some of the provisions however, have already taken effect, including the passage of the Durbin Amendment, which capped fees charged on debit card transactions.
While whistleblower protection and bounty hunter reward programs appear to be a step in the right direction, they have been around in some form for many years. Bernie Madoff had a whistleblower turn him in nearly 10 years before his arrest, when financial analyst Harry Markopolos informed the SEC that it was mathematically impossible to achieve the gains that Madoff was claiming to deliver. Unfortunately for many of his investors, the SEC ignored Harry in 2000, 2001, 2005, and again in 2007, even though he presented further evidence each time!
Before investing any of your hard earned money always do your homework, and if it sounds too good to be true, it probably is! And unfortunately, according to the Financial Industry Regulatory Authority (FINRA), only 15% of investors have checked their financial advisor’s background with state or federal regulators. That’s a surprising statistic considering the country’s current economic climate, which is loaded with Ponzi schemes and other types of financial fraud.
So, be vigilant and proactive. Failing to take responsibility for your financial decisions and leaning too heavily on your advisor or the government, is a mistake that could eventually leave you, financially burned!
I’d like to hear from many of you. Have you ever been a victim of a fraud or con-artist? If so, tell me how it happened. Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!
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