Money Monday: Avoid Investment Fraud
BET.com shows you how to protect your money.
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Scams Don’t Care Who You Are - With the NFL draft just days away, many players look forward to becoming instant millionaires, but if you have money one day, it isn’t promised you’ll have it the next. “I’m in hell,” former Cincinnati Bengal Terrell Owens told GQ magazine. In just 16 years, the 38-year-old had spent nearly all of the $80 million he made during his career and owes $44,600 a month in child support for his four children. Some may question how someone can go broke so quickly without knowing, and in the case of Owens it’s because of his financial advisors. Your net worth can make you the target for investment scams and with the help of the U.S. Securities and Exchange Commission, BET.com breaks down how to avoid fraud. — Danielle Wright(Photo: AP Photo/Don Wright, File)
Photo By AP Photo/Don Wright
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Ask Questions and Check Out the Answers - Fraudsters rely on the fact that many people simply don't bother to investigate before they invest. It's not enough to ask a potential advisor for more information or for references — fraudsters have no incentive to set you straight. Savvy investors take the time to do their own independent research. Make sure you ask questions and when you do, verify the answers you are being told. (Photo: Comstock/Getty Images)
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Research the Company Before You Invest - You'll want to fully understand the company's business and its products or services before investing. Before buying any stock, check out the company's financial statements on the SEC's website, or contact your state securities regulator. All but the smallest public companies have to file financial statements with the SEC. Don’t use unsolicited e-mails, message board postings and company news releases as the sole basis for your investment decisions. (Photo: moodboard/Getty Images)
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Know the Salesperson - Spend some time checking out the person touting the investment before you invest — even if you already know the person socially. Always find out whether the securities salespeople who contact you are licensed to sell securities in your state and whether they or their firms have had run-ins with regulators or other investors. You can check out the disciplinary history of brokers and advisers quickly — and for free — using the SEC's and FINRA's online databases. Your state securities regulator may have additional information.(Photo: Image Source/Getty Images)
Photo By Photo: Image Source/Getty Images
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Be Wary of Unsolicited Offers - Be especially careful if you receive an unsolicited fax or e-mail about a company — or see it praised on an Internet bulletin board — but can find no current financial information about the company from other independent sources. Many fraudsters use e-mail, faxes and Internet postings to tout thinly traded stocks, or stocks exchanged in low volumes, in the hopes of creating a buying frenzy that will push the share price up so that they can sell their shares. Once they dump their stock and quit promoting the company, the share price quickly falls.(Photo: Mario Tama/Getty Images)
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