Bulletin #207 - The Ethics Quiz

Recently, securities regulators and watchdog groups have alerted millions of consumers to this years’ most common schemes and scams.  Nicknamed “The Dirty Dozen”, the top twelve rip-offs are ranked in order of prevalence and seriousness, as follows:

1. SENIOR INVESTMENT FRAUD. Older investors are being targeted now more than ever with complex investment scams - all promising inflated returns.
2. VARIABLE ANNUITY SALES.  A legitimate investment product, but investors are regularly misled regarding possible market risk, high fees and surrender charges.
3. CHARITY/TSUNAMI SCAM.  Con artists attempt to collect money for disaster relief or offer phony bonds to finance the reconstruction of disaster areas.
4. PONZI SCHEMES. These schemes promise high returns to investors and uses money from new investors to pay previous investors.
5. MILITARY FRAUD. Predatory salespeople induce military recruits and active military personnel into purchasing unsuitable investment products.
6. VIATICAL SETTLEMENTS. One of the riskiest investment products, viatical contracts are interests in the death benefits of life insurance policies.
7. LIVING TRUST MILLS / PRETEXT SOLICITATIONS TO SENIORS. The real goal of the sales agent is to obtain detailed personal financial information, which will then be used to sell the senior an unsuitable investment product.
8. BAIT AND SWITCH SCHEMES. The advertised investment promises spectacular returns but the salesperson discourages the sale and offers something else.
9. AFFINITY FRAUD. Scammers often use their victim’s religious or ethnic identity to gain peoples trust and then steal their life savings.
10. WRONG NUMBERS AND STOCK TIPS SCAM. Investors receive a "misdialed" call or fax or receive a “misdirected” email from a stranger leaving a "hot" investment tip for a friend.
11. CD + BONUS SCAM. To attract investors, scammers promise investors higher than normal rates of return, plus a bonus payment.  The bonus is paid to the investor up front and the scammer pockets the investment.
12. ONLINE ESCROW FRAUD. Unsuspecting buyers or sellers who participate in online auctions are lured to transact business through a fraudulent web site and then lose their funds and/or goods.

ADVISORS BEWARE
Regulators have stated that insurance agents (and former agents or brokers) are being actively recruited to market and sell many of the above-mentioned scams.    Therefore, regulators and senior groups alike have issued stern warnings to investors to thoroughly investigate new investment opportunities and the advisors that sell them before handing over their money. 

So exercise caution and do not allow high commissions or a so-called “great opportunity” to lure you into selling high-risk or fraudulent investments. Continue to protect your fine reputation and do not place your fulfilling career (or your freedom) in jeopardy.

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