Stock and investment scams are something that has been on people’s minds quite a bit in recent decades. Unethical activities of unscrupulous investors, scam artists, and even respected financial institutions have caused the federal government to increase its diligence in uncovering stock and commodities fraud. But, it is not just the responsibility of government to expose fraudulent behavior. Individual investors are just as capable of discovering malpractice in the exchange markets.
The Commodity Futures Trading Commission (CFTC) is the federal government agency that controls commodity futures, commodity options, and swaps trading markets. A steady rise in commodities fraud has been tracked over recent years, and many of the case investigated involves trades in foreign currency, and precious metals.
Shady investors and scoundrels in the business sector bilk small investors out of billions of dollars annually. When you look at the combined numbers being raked in by internet fraud, insider trading, microcap fraud, accountant fraud, and the age old Ponzi schemes (just to name a few) it makes you wonder how anyone is making any “legal” investment moves.
Even though anyone can be caught up in a scandal and lose much of their savings through phony business dealings, sadly, it is the elderly who are most preyed upon by savvy hoaxers, and con men. It should never be forgotten that just because these types of criminals wear suits, and sit behind big desks in towering office buildings does not make them any less despicable, or dangerous to the safety of the general public than the common thief who steals from people while they sleep.
In fact, the damage caused by these villains can have catastrophic repercussions on the economic standing of entire markets. Top banking and investment officials with open, and direct access to vital information can, and have committed crimes such as overstating assets, understating liabilities, being less than truthful regarding costs, and falsely reporting the loss or gain of profits. The failure of Enron is a prime example of how these points were manipulated to cause one of the biggest commodities scandals in the history of finance.
As an individual investor, the average citizen should, of course, be armed with the knowledge of market sentiments, how the commodities market functions, as well as what red flags to be aware of when entering a situation where fraud could appear. Some activities that should set alarm bells ringing include:
- Offering investments that promise unrealistic returns with little, or no risk.
- Be alert to any business that offers to sell you futures, or options in the commodities markets of precious metals, foreign currency, or oil and gas products; these areas are heavily targeted by scammers.
- Be leery also of anyone offering to trade your money for you in these markets, or linking your investment into a pool with other investors.
The wording used by slick-tongued, savvy scammers can be a siren song for many people who are easily lead to believe that they can get rich quick in the trades market. Many crooks will focus on particular ethnicities, and geographic locations that research has shown are more vulnerable to these types of attacks. Listen carefully when approached by a financier claiming to have the inside scoop on a great investment opportunity. Listen carefully and be prepared to ask so many questions that the potential scammer will quickly see you will not easily be conned.
Here are some tactics used by investment criminals to be aware of:
- Enticing you to believe that high profits can still be gained from old news that has already been made available to the public?
- How did this person locate you? Who are they? Often these criminals will prey on family, churches, and other community-based organizations where they gain information about who might be likely to be interested in an investment opportunity.
- Someone you have never met approaching you about an investment opportunity and you for your personal information? You should immediately turn the tables and begin asking this individual for all of their credentials.
- Claiming to be in possession of “secret”, or “insider” information is more likely someone you do not want to trust, as with those who promise quick turnarounds, and financial guarantees.
- They will pressure you by putting a strict time limit on when the need your cash. This is designed to override your critical thinking process, and hasten you to a bad decision.
- Any opportunities you see advertised on radio, television, or online, are immediately suspect.
The bottom line is that before beginning to trade in the commodities markets, you should either have a verified, accountable financial advisor whom you trust to help you make important money decisions. Barring that, if you are a do-it-yourselfer you should be educated enough that you are capable of determining the right course of action when confronted with investment opportunities that are advertised as “sure things”, or “low risk – high reward”. Like so many other opportunities we discover in life if it seems too good to be true it probably is.