FAKE SEALS AND PHONY NUMBERS: HOW FRAUDSTERS TRY TO LOOK LEGIT

Some fraudsters tell straightforward lies, fabricating facts or making bogus claims. That's why we encourage investors to do their own independent research.  Other fraudsters salt their stories with grains of truth to give their schemes an air of legitimacy. The SEC and global securities regulators have encouraged investors to investigate, ask tough questions about their investments and the people who sell them. 

One ruse fraudsters use involves assurances that an investment has been registered with the appropriate agency. The fraudsters will purport to give you the agency's telephone number and invite you to verify for yourself the "authenticity" of their claims. But even if the agency does exist, the contact information almost certainly will be false. Instead of speaking with an actual government official, you'll reach the fraudsters or their colleagues — who will give the company, the promoter, or the transaction high marks.

Another trick involves the misuse of a regulator's seal. The fraudsters copy the official seal or logo from the regulator's website (or create a bogus seal for a fictitious entity) and then use that seal on documents to make the deal look legitimate. You should be aware that the SEC, like other state and federal regulators, does not allow private entities to use its seal. Also, the SEC does not approve or endorse any securities, issuers, products, services, professional credentials, firms, or individuals.  Here's how you can protect yourself against these and other deceptive tactics:

Deal Only With Real  Regulators 
It's not hard to figure out who the real regulators are.   We list securities regulators on some of our other pages:  International regulators , Canadian regulators, and  US State regulators .  You'll find legitimate contact information for the SEC in the SEC Contact Us page and on SEC Division Homepages. If you're unsure that you're dealing with the real SEC, use the SEC online Question Form to ask.

Be Skeptical of Government "Approval" 
The SEC does not evaluate the merits of any securities offering, nor do they determine whether a particular security is a "good" investment. Instead, the SEC's staff reviews registration statements for securities offerings and declares those statements "effective" if the companies appear to have satisfied disclosure rules. In general, all securities offered in the U.S. must be registered with the SEC or must qualify for an exemption from the registration requirements. 

Look Past Fancy Seals and Impressive Letterheads
Most people  know how easy it can be to copy and paste images. As a result, today's technology allows fraudsters to create legitimate-looking websites and stationery at little to no cost. Don't be taken in by a glossy brochure, a glitzy website, or the presence of a regulator's official seal on a web page or document. The SEC does not authorize private companies to use their seal, even as a legitimate link to the SEC website. If you see the SEC seal on a company's website or materials, think twice.

Check Out the Broker and the Firm
Always verify whether any broker offering to buy or sell securities is properly licensed to do business. If the person claims to work with a U.S. brokerage firm, call FINRA Public Disclosure at (800) 289-9999 or the organization's BrokerCheck to check out individual broker and the firm. Be sure to confirm whether the firm actually exists and is current in its registration, and ask whether the broker or the firm has a history of complaints. You can often get even more information from your state securities regulator.

Be Wary of "Advance Fee" or "Recovery Room" Schemes
An increasing number of investment-related frauds target investors worldwide who purchase "microcap" stocks, the low-priced and thinly traded stocks issued by the smallest of U.S. companies. If the stock price falls or the company goes out of business, the fraudsters swoop in, falsely claiming that they can help investors recover their losses for a substantial fee disguised as a tax, deposit, or refundable insurance bond.  For more information about these types of frauds, visit The Fleecing of Foreign Investors.

If you want to invest wisely and steer clear of frauds, you must get the facts. Never, ever, make an investment based solely on a promoter's promises or what you see on the Internet. Don't even think about investing on your own in small companies that don't file regular reports with the SEC, unless you are willing to investigate and check the truth of every statement about the company. 
 

Please note that OldStocks.com does not sell investments or investment advice.  It is highly recommended that you contact a registered investment professional for these services.   Items sold in our catalog are cancelled or obsolete, and only sold as collectible items.

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