Secretary of State Jason Kander has issued an Investor Alert advising Missourians to be wary of investment schemes promising unusual or excessive returns.
“If an investment offers guaranteed above-market returns with no risk, or if you cannot tell how the investment makes money, you should avoid investing,” Kander said. “Remember, if it sounds too good to be true, it probably is.”
High-yield investments are typically offered through websites, social media platforms or in person. Those attempting to sell these investments offer high, unsustainable rates of return—more than one percent per day and as high as 100 percent per day—through vague or murky trading strategies that often include the promise of safety.
“It remains true today that there is no free lunch,” Kander said. “If an investment offers a very high profit and claims no risk, there is a good chance it is a fraudulent scheme, a riskier investment, or an investment that will be difficult to sell if it doesn’t work out.”
Additionally, Kander provided the following signs for detecting an investment as fraud:
1) High, Unsustainable Yields: Many High-Yield Investment scams purport to offer excessively high rates of return, often in a short time frame. Corporate bonds with an A rating offer an average yield of 2.89% and 4.17% over 10- and 20-year time frames.
2) Off-shore accounts: Avoid any investment offering that requires you to deposit or wire money to a foreign-based account.
3) Recruiting Incentives: Avoid investment schemes with promises of higher returns or the prospect of a “referral bonus”.
4) Unclear Methods: Avoid making any investment that cannot provide concrete information about the company, dealer, product, service or how the investment will be used. Further, you should always ask for a prospectus.
5) Typos and Grammatical Mistakes: When researching an investment opportunity, be wary of documents, website and e-mail copy with excessive typos or poor grammar.
“Before you invest, be sure to call the Investor Protection Hotline to ensure the person making the offer is registered in Missouri,” Kander said. “Don’t hesitate to contact us when something sounds too good to be true or if you feel you’ve become the victim of an investment scheme.”
Call the Investor Protection Hotline at 1-800-721-7996 or visit www.MissouriSafeSavings.com for more information.