Sponsor Robert Siciliano as he runs the Boston Marathon for Miles for Miracles, Children's Hospital Boston
ROBERT SICILIANO is fiercely committed to informing, educating, and empowering Americans so they can be protected from violence and crime in the physical and virtual worlds.


Check here if you're human


How To Prevent Investment Fraud

Pin It

The Securities and Exchange Commission defines a Ponzi scheme as “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.”

The best way to avoid being taken by a Ponzi scheme is to make an effort to understand how the system is supposed to work.

The North American Securities Administrators Association recommends the following precautions:

– Contact your state or provincial securities regulator to see if the investment vehicle and the person selling it are registered.

– Contact your local Better Business Bureau to see if any complaints have been filed against the venture’s promoters or principals.

– Deal only with financial advisers, broker-dealers or financial institutions having a proven track record.

– Ask for written information on the investment product and the business. Such information, including financial data on the company and the risks involved in the investment, is contained in a prospectus.

– Don’t take everything you hear or read at face value. Ask questions if you don’t understand, and do some sleuthing for yourself.

– Steer clear of investments touted with no downside or risk.

But these tips wouldn’t be enough to prevent someone like Bernie Madoff from making a convincing play for your money.

To prevent yourself from falling for a more sophisticated scam, you need to understand the concept of “custody,” which refers to where the funds are housed. Make sure your funds are under the custody of a reputable investment firm such as a Charles Schwab, Fidelity, or Merrill Lynch. You should be able to see your accounts when logging into their website. Financial advisers may be employed by a custodial firm or may be independent brokers. Your funds should be with a large, well-known firm, not in the custody of a broker.

Bernie Madoff was a financial adviser who got away with his fraud because he controlled his clients’ assets and falsified the documentation. If you invest with a financial advisor that generates his own statements, you are at risk.

A financial adviser or broker should only have access to your funds in order to manage them, not to control them. They shouldn’t be able to withdraw funds without your consent. And they should never have the ability to move funds without your awareness.

Identity theft can happen to anyone. McAfee Identity Protection, offers proactive identity surveillance, lost wallet protection, and alerts when suspicious activity is detected on your accounts. McAfee Identity Protection puts victims first and provides live access to fraud resolution agents who work with the victim to help restore their identity even from past theft events. For additional tips, please visit http://www.counteridentitytheft.com.

Robert Siciliano is a McAfee Consultant and Identity Theft Expert. See him discussing Ponzi Scams. on CBS Boston (Disclosures)

About the Author
ROBERT SICILIANO, CEO of IDTheftSecurity.com is fiercely committed to informing, educating, and empowering Americans so they can be protected from violence and crime in the physical and virtual worlds. His "tell it like it is" style is sought after by major media outlets, executives in the C-Suite of leading corporations, meeting planners, and community leaders to get the straight talk they need to stay safe in a world in which physical and virtual crime is commonplace. Siciliano is accessible, real, professional, and ready to weigh in and comment at a moment's notice on breaking news.

Similar Posts

  • Investment Fraud: How to Avoid Ponzi Schemes
    In response to National Fraud Awareness Week it’s important to bring attention to the biggest and worst investment fraud of all: the Ponzi Scheme. Wikipedia defines a Ponzi scheme as fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by
  • SEC comes down on Breached Companies
    If you’re wondering if businesses, who’ve been targets of cybercrime, have been properly handling the fallout, you have company: The U.S. Securities and Exchange Commission. The SEC is investigating this very issue. Key Questions Include: Did the businesses adequately protect data? Were investors properly notified about the breach’s impact? One of the companies being investigated is Target Corp. The SEC,
  • Mom Was Wrong. Strangers Good. People We Know Bad.
    Robert Siciliano Identity Theft Speaker An axiom in business is that we buy from and do business with those who we know like and trust. In the 21st century we have seen CEOs, investment bankers, politicians and those in the highest positions of trust completely screw everyone who put them on their pedestal. Madoff pleads guilty for
  • Banking and Brokerage Accounts vulnerable to “Account Takeover”
    It wasn’t pretty: those fairly recent credit card breaches at a few big-name retailers. As newsworthy as these were, they’re actually not the greatest risk for wealthy folks; a bigger foe is a money management firm lacking sufficient checks and balances. Attack schemes: Another type of attack can hit an organization hard: some cyber punk getting into
  • What Identity Theft Protection Looks Like
    You hear a lot about identity theft protection these days. But what does it look like? I’ve subscribed to no less than six different services in the last decade. Most of them make their presence felt in the form of a charge on your credit card statement, and that’s about it. One thing I like about

Leave a Comment

You must be logged in to post a comment.

Xtreme School

Featured in

Anderson Cooper John Stossel Robert Siciliano Featured in
Browse by Month

Browse by Category