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How to Protect Against Investment Fraud:
A Few "Ounces of Prevention"

The front line of defense against investment fraud is you, the individual investor. An unscrupulous con man or fast-talking "financial adviser" in a few minutes can swindle an unsuspecting investor out of a nest egg that took a lifetime to build. Unlike muggers and thieves, investment fraud artists don't take your money against your will; they persuade you to hand it over willingly. Don't fall for their tricks. Follow these tips to protect yourself and your family from fraud. Remember that "an ounce of protection is worth a pound of cure."

Beware of Strangers Asking for Money

• Never trust a stranger who calls and asks for your money.
• Almost anyone can sound nice or honest over the telephone - many swindlers ply their trade with the best of manners.

Free Financial Advice May Be Worth Less Than You Pay For It

• Do not feel indebted to someone who gives you "unsolicited' financial advice. This person may be trying to gain your trust so he can make fees and commissions by investing your money, sometimes in unstable investments.
• When a stranger describes a promising investment, always ask yourself: "If this investment opportunity is as good as the salesman says, why is he calling me, instead of keeping it to himself and his friends?"
• If an investment sounds "too good to be true," it probably is. Some unscrupulous companies try to entice investors with promises or returns as high as 25%, 50% or even 500%. Such claims are usually fraudulent.

Keep Personal Information Personal

• Never give out personal financial information like credit card or bank account numbers or balances over the telephone unless you are absolutely certain that the caller is legitimate.
• Even then, ask yourself if there is another way to do business that avoids your giving this information over the phone.

Take Your Time - Don't Be Rushed Into Investment Decisions

• Experience has shown that sales persons who use high-pressure tactics to force an investor into an immediate decision are almost always pitching frauds - they don't want you to think too carefully or find out too much because you may figure out the scam.
• Insist on receiving a prospectus or printed offering materials. READ THEM. Any investment worth making will still be available after you have had time to read about it.
• Don't believe the age-old lie that you will lose money if you don't get in right away. The truth about such claims almost always turns out to be that you will lose money if you do get in.
• If you have questions, ask your attorney, accountant, or financial adviser to explain the investment.

Don't Throw Good Money After Bad

• Beware of "reload" scams. Con artists know the panic people feel after a sudden financial loss. They know that it's the best time to promise to recover the original funds in another "sure thing" scheme. Don't fall for the same (or a similar) scheme twice.

Check Out Your Broker or Adviser

• Unless you are absolutely sure that the person is legitimate, confirm that your broker or financial adviser is registered and in good standing.
• The Maryland Securities Division (410-576-7784) maintains and has access to databases with information about brokers, investment advisers and specific securities.
• The National Association of Securities Dealers (1-800-289-9999) also can provide detailed information about brokers and financial advisers.

Keep Tabs On Your Investments

• Be wary when a financial planner says "leave everything to me."
• Monitor the activity on your account. Insist on receiving regular statements.
• Never be embarrassed or apologetic about asking questions about trading activity that looks excessive or unauthorized. It's your money, not your broker's.
• Keep all of your records relating to your investments, including notes of conversations you have with brokers, salespersons, financial advisers, and the like.

Don't Be Afraid to Complain

• If your broker or adviser stalls or hesitates when you want all or part of the principal of, or profits from, your investments, ask the reason for the holdup. You may have uncovered a questionable practice.
• If you suspect that something is amiss and the explanations you receive are not satisfactory, call the Securities Division and file a complaint.
• If you think you have been defrauded in an unconventional investment, don't hesitate to check with the Securities Division. The definition of "security" is very broad and includes not only stocks and bonds, but also certain partnership interests, notes and investment contracts.
• Don't let embarrassment or fear keep you from reporting investment fraud or abuse.

Call us. We're here to help!
The Maryland Securities Division
(410) 576-6882


Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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