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					                     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:
                                    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                                 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.

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