Steps You Can Take To Avoid Investment Fraud (2024)

FAQs

How to protect from investment fraud? ›

Go for legitimate investment firms: Investors should look for legitimate investment firms and do background checks to find their track record. Legitimate firms will not send unsolicited advice or lure investors of exorbitant returns.

A pushy salesperson: No reputable investment professional should push you to make an immediate decision about an investment or tell you that you've got to “act now.” If someone pressures you to decide on a stock sale or purchase, steer clear. Even if no fraud is taking place, this type of pressuring is inappropriate.

The Securities and Exchange Commission (SEC) is a U.S. government agency created by Congress to regulate the securities markets and protect investors. The Commodity Exchange Act regulates commodities and futures trading in the U.S. It has been in force since 1936.

To combat inventory fraud, businesses can take proactive steps such as implementing physical security measures, conducting regular inventory counts, rotating inventory, and establishing strong financial controls.

Don't invest in something you don't understand. Another way to protect your investment is to diversify. Don't put all your eggs in one basket. Invest in a variety of ICOs and don't put too much money into any one of them.

The Securities and Exchange Commission (SEC) oversees securities exchanges, securities brokers and dealers, investment advisors, and mutual funds in an effort to promote fair dealing, the disclosure of important market information, and to prevent fraud.

How does investment fraud happen? ›

Fraudulent portfolio or investment managers lure investors on the promise of low risk and high returns, but the money is never really invested. In most cases, the manager steals the funds for themselves, and when an investor asks to withdraw their money, the manager uses another investor's money to pay them back.

Investment fraud is a form of deception that involves providing false or misleading information to induce investors to make financial decisions that benefit the fraudster. The law categorizes it as a form of estafa, which is a crime against property under the Revised Penal Code.

Don't be tricked into giving a fraudster access to your personal or financial details. Never automatically click on a link in an unexpected email or text. Always question uninvited approaches in case it's a scam. Instead, contact the company directly using a known email or phone number.

Such deductions are called theft loss tax deduction or embezzlement loss tax deduction. Theft loss tax deduction can be utilized after an investor is the victim of misconduct by their broker, or when someone is the victim of any scam.