Washington State Department of Financial Institutions

Consumer Alert

DFI Joins NASAA In Reminding Consumers That Investment Scams Often Lurk Behind Ominous Economic Forecasts

January 29, 2008

The Washington State Department of Financial Institutions (DFI) Director Scott Jarvis joins the North American Securities Administrators Association (NASAA) in reminding investors not to allow recent negative economic news and stock market volatility to lead them into high-risk speculative investments. Perpetrators of many fraudulent schemes use gloomy economic headlines to lure unsuspecting investors.

“Investment scam perpetrators stay current on economic news in order to seem more legitimate and believable to their victims,” Jarvis said. “These predators will use investor fears to promote illegitimate schemes with promises of high return with little to no risk that, in reality, often leave investors holding nothing but empty wallets and drained bank books.”

Phony investment scheme perpetrators promising high returns to make up for losses in retirement accounts often target investors 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 current retiree.”

DFI and NASAA encourage investors to:

Investors, especially those nearing or in retirement, should be skeptical of any recommendation to liquidate a well structured, diversified investment portfolio to fund the purchase of an alternative investment product that may expose them to high commissions, high fees, excessive complexity, and undue risk.

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