Who Reads the Headlines? Financial Con Artists

HARRISBURG, Pa., Aug. 25, 2011 /PRNewswire/ -- The Pennsylvania Securities Commission (PSC) today warned unwary investors that times of economic turbulence like the current stock market attracts scam artists and flawed "get rich quick schemes".

"Sad to say, con artists read the financial pages religiously and are ready to prey on investor anxieties," said Pennsylvania Securities Commission Chairman Robert Lam. "That's why we've placed the age old 'make up for your losses overnight' promise at the top of our annual list of 'Top Ten Traps for Investors' this year.

"Investors are troubled by lingering economic uncertainty and volatile stock markets," Lam said. "They're looking to recover losses and some people are only too willing to make fantastic and unachievable promises in order to get their hands on whatever savings some investors may have left."

Commissioner Tom Michlovic said the raw deals come in several flavors but all relate in some way or other to the down economy. "It could be distressed real estate, investing in gold futures or limited partnerships supposedly related to the Marcellus Shale natural gas fields.  Even if the offers are not outright illegal, they involve extremely high risk – something to be avoided by someone who just took a beating in the last few weeks in the stock market."

Commissioner Steven Irwin warned, "Con artists follow the news and seek ways to exploit the headlines to their advantage while leaving investors holding an empty bag."

Irwin said headline-related investor complaints reaching state and provincial securities regulators include questionable claims, such as: "Realize safety and appreciation in gold;" "Wave energy: the future to power our homes;" "Synthetic fuels take the oilman out of our pockets;" and "Invest in foreclosed homes, help others and make a fortune!"

"Investors who have suffered significant losses in the past month are looking to turn their portfolios around," Lam said. "Normally prudent investors may be tempted to throw caution to the wind in order to get in on the ground floor of the 'next big thing.'  We want to caution them to think twice and be especially careful if – as the old saying goes – it sounds too good to be true."

Michlovic urged investors to learn the warning signs of investment fraud and independently verify any investment opportunity as well as the background of the person and company offering the investment. The Pennsylvania Securities Commission provides detailed background information about those who sell securities or give investment advice, as well as about the products being offered.

Irwin also cautioned, "Investors should do business only with licensed brokers and investment advisers and should report any suspicion of investment fraud to us."

To view the 2011 Top Investor Traps and Threats, please visit the PSC's website at www.psc.state.pa.us and click on the list under Latest Updates.

Citizens can get additional information on how to avoid investment fraud by calling the Pennsylvania Securities Commission, toll free, at 1-800-600-0007 or at the PSC website: www.psc.state.pa.us.

SOURCE Pennsylvania Securities Commission