Red Flags

Be aware of these red flags and tips when making investments:

IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS – When an offer sounds too good to be true, there is usually a reason and most often, your instinct will tell you so. To overcome the instinct, the con may be cloaked in words like “breakout stock pick”, “huge upside and almost no risk”, “incredible gains” or “amazing returns on investment.” Typically, high risk investments offer higher rates of return than less risky investments do, but no legitimate investment can guarantee a “great return” on your money.

ACCOUNT DISCREPANCIES – Unauthorized trades, missing funds or other problems with account statements could be the result of a genuine error – or they could indicate churning. Churning is a fraudulent practice where brokers trade excessively in an investor’s account to make additional commissions. Make sure your account, once established, is managed in the manner you authorized. Also be mindful that the risk for fraud increases when the investment advisor is the same firm as the holder of the assets (the custodian).

PUSHY SALESPERSON – Scammers will use all sorts of high-pressure sales tactics to swindle you. They’ll tell you a once-in-a-lifetime opportunity will be gone if you don’t act immediately or “everyone’s buying it, so you should too”. Resist the pressure. Take the time you need to investigate before sending money.

KNOW THE SALESPERSON – Every con game, whether online, by phone, or in person, revolves around a salesperson or a sales pitch. Know who you are dealing with. Check their background. Call the Securities Commission or visit our website to verify that the person offering you a security is registered.

BEWARE OF THE HALO – Not all salespersons will come across as ‘pushy’. On the other end of the spectrum is the sweet old lady or kind gentleman who “just wants the best for you.” The pitch often involves knowing quite a bit about you personally and emerges after a certain level of comfort is achieved. The skilled con artist knows that earning your trust is one way to get closer to your money. Beware of the individual who suddenly shows up and demonstrates extraordinary personal kindness.


Fraudsters are counting on you not to investigate before you invest. Fend them off by doing your own digging! It is not enough to ask the fraudster for information or references. They have no incentive to be honest. Take the time to do your own independent research.