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State regulators warn against scams tied to economy
OLYMPIA, Wash., and COLUMBUS, Ohio (1/31/08)--Investors should be wary of economic scams promising high returns with little-to-no risk, the Washington State Department of Financial Institutions (DFI) and the Ohio Department of Commerce’s Division of Securities warned this week. Many investment scammers use negative economic news to coerce investors into high-risk investments, according to DFI Director Scott Jarvis. “Investment scam perpetrators stay current on economic news in order to seem more legitimate and believable to their victims,” Jarvis said. “These predators use investor fears to promote illegitimate schemes with promises of high return with little-to-no risk that often leave investors holding nothing but empty wallets.” Kimberly Zurz, Ohio Department of Commerce director, agreed. “A get-rich quick promise is a common sign of investment fraud,” she said. Both departments supervise state-chartered credit unions. Investment scheme perpetrators who promise high returns especially target those nearing retirement. “We’re concerned that in trying to build a more comfortable cushion for retirement, entire retirement savings built over a lifetime of working could be cleaned out,” Jarvis said. “Hasty decision making could potentially stamp out any chance of retirement for some consumers, or financially ruin a retiree.” Investors should hang up on aggressive cold callers and delete unsolicited e-mails promoting investment opportunities. Legitimate financial professionals generally do not recommend changes to investment portfolios based on short-term economic news, said Brian Misencik, acting securities commissioner at the Ohio Department of Commerce. “Investors should view with great skepticism any recommendation to liquidate a well-structured, well-diversified investment portfolio to purchase an alternative investment product that may expose them to high commissions, high fees and undue risk,” he said. Zurz also warned against high-pressure sales tactics for unregistered securities and non-traditional investments such as foreign currency, oil and gas investments, or offers to send money offshore to “safe havens.” Both the Washington DFI and the Ohio Department of Commerce encouraged investors to contact their DFI’s securities division or the Division Investor Protection hotline to make sure that the investment and seller are licensed and registered, and to see if any enforcement actions have been taken against the seller.
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