North 2005 NASAA Top 10 American The following ranking of NASAA’s Top 10 threats to investors for 2005 is based on the order of prevalence Securities and seriousness as identified by an annual survey of state securities regulators: Administrators 1. Ponzi Schemes: The premise is simple: pay early Association investors with money raised from later investors. The only people who make money are the promoters who set the Ponzi in motion. The North American Securities Administrators 2. Unlicensed Individuals Selling Securities: Association (NASAA) has identified the most Anyone selling securities without a valid securities common ploys con artists are using to cheat license should be a red alert for investors. investors out of hundreds of millions of dollars. Remember: No license, no sale. 3. Unregistered Investment Products: Con Along with the Top 10, three investment artists bypass stringent state registration opportunities also were cited for “dishonorable requirements to pitch viatical settlements, pay mention,” including penny stocks, private telephone and ATM leasing contracts, and other placements, and investment seminars. investment contracts with the promise of “limited or no risk” and high returns. Before making any investment, all investors are 4. Promissory Notes: Empty promises can leave urged to ask the following questions: these notes worth less than the paper on which they • Are the seller and investment licensed and are printed. registered in your state? 5. Senior Investment Fraud: Seniors should carefully check the credentials of investment • Has the seller given you written information that advisers or financial planners holding themselves out fully explains the investment? to be “senior specialists.” • Are claims made for the investment realistic? 6. High-Yield Investment Schemes: Con artists lure investors with promises of triple-digit returns • Does the investment meet your personal through access to “risk free guaranteed high yield investment goals? instruments” or something equally deceptive. Investors should also contact their state or provincial 7. Internet Fraud: Stock promoters are using online securities regulator with any questions about an “boiler rooms,” instant messaging, and fake websites investment product, broker or adviser, before to lure investors into “pump-and-dump” stock making an investment. One phone call can save a lot schemes. of money and heartache. 8. Affinity Fraud: Con artists are increasingly targeting religious, ethnic, cultural and professional It pays to remember that if an investment sounds too groups. good to be true, it usually is. 9. Variable Annuity Sales Practices: Senior investors, in particular, should beware of the high Recognizing that financial education is a powerful surrender fees and steep sales commissions agents weapon in the fight against investment fraud, often earn when they move investors into variable NASAA offers a wealth of information about each of annuities. the Top 10 scams, as well as tips on how to detect 10. Oil and Gas Scams: With oil topping $50 a barrel con artists and avoid becoming a victim in the and continued Middle East instability, regulators NASAA Fraud Center at www.nasaa.org. warn that con artists may renew schemes promising quick profits in oil and gas ventures. NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, Canada, and Mexico.