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Press Release


For Immediate Release:
March 2, 2015

Office of The Attorney General
John J. Hoffman, Acting Attorney General

Division of Consumer Affairs
Steve C. Lee, Acting Director

Bureau of Securities
Laura Posner, Chief
  For Further Information and Media Inquiries:
Jeff Lamm
Neal Buccino
(973) 504-6327

National Consumer Protection Week, Day 1: "Check Before You Invest" To Avoid Investment Scams

NEWARK –Acting Attorney General John J. Hoffman, the New Jersey Division of Consumer Affairs, and the New Jersey Bureau of Securities (Bureau) today launched National Consumer Protection Week by reminding New Jerseyans to "Check Before You Invest" and watch for investment scams when planning for their financial future.

"During National Consumer Protection week and throughout the year, the Division of Consumer Affairs and Bureau of Securities protect New Jerseyans against fraud – and give them the education and awareness they need to protect themselves," Acting Attorney Hoffman said.

Division of Consumer Affairs Acting Director Steve Lee said, "Millions of people fall victim to fraud each year. It can happen to anyone. Protect yourself from these scam artists by doing your homework.  Know what you are buying – whether it is a consumer good, investment product, or service – and the person or business selling it, before you make any purchase."

Bureau of Securities Chief Laura Posner said, "Fraudsters often use the same sales tactics and promises to swindle investors out of their money, and many of the most common investment frauds – including pyramid, Ponzi and pump-and-dump schemes – share similar traits.  The best way to protect yourself from falling victim to these schemes is to contact the Bureau of Securities to determine whether the security being sold and the person selling it are registered, and be on guard for the warning signs of investment fraud."

As noted by the Bureau of Securities, the most common red flags of investment fraud are:

  • Guarantees.  Investors should be suspicious if anyone guarantees that an investment will perform in a certain way. All investments carry some degree of risk.
  • Unregistered products and unregistered financial professionals.  With very few exceptions, companies must register their securities with the Bureau or with the Securities and Exchange Commission (SEC) before selling shares to the public.  In addition, financial professionals and their firms must be registered with the Bureau, the SEC, or the Financial Industry Regulatory Authority (FINRA), depending on the type of business the individual or firm conducts.  Investors can learn whether a product, financial professional, or firm is registered by calling the Bureau at 866-I-INVEST (866-446-8378). 
  • Overly consistent returns.  Any investment that consistently goes up month after month, or provides remarkably steady returns regardless of market conditions, should raise suspicions, especially during turbulent times.
  • Complex strategies.  Investors should avoid anyone who credits a highly complex investing technique for unusual success.  Legitimate professionals should be able to clearly explain what they are doing.  It is critical that you fully understand any investment before you invest – including what it is, what the risks are, and how the investment makes money.
  • Missing documentation.  If someone tries to sell a security with no documentation – that is, no prospectus in the case of a stock or mutual fund, and no offering circular in the case of a bond – he or she may be selling unregistered securities.
  • Account discrepancies.  Unauthorized trades, missing funds or other problems with your account statements could be the result of an error – or they could indicate "churning" or other types of fraud.  Churning occurs when a broker engages in excessive buying and selling of securities in order to generate commissions that benefit the broker.  Keep an eye on your account statements to make sure account activity is consistent with your instructions.  And be sure you know who holds your assets.
  • A pushy salesperson.  No reputable investment professional should push you to make an immediate decision about an investment, or tell you that you must "act now."  If someone pressures you to make a quick decision on a stock sale or purchase, steer clear.

Investors can protect themselves by watching for those warning signs, and by asking questions.  It is important to learn as much as possible about investments, and the people and firms who sell them, before you invest.

To learn about your investment professional: 

  • Ask whether and where the individual is registered to sell investments.  A legitimate financial professional and his or her firm must be registered with the Bureau, FINRA, or SEC. 
  • After speaking with the professional, you should independently verify their information by visiting the Bureau of Securities Website, NJSecurities.gov, or calling the Bureau at 866-I-INVEST (866-446-8378). 

To learn about the investment: 

  • Ask whether and where the investment is registered.  Verify that information, too, by contacting the Bureau of Securities.

  • Review all of the information regarding the investment – and if necessary, read it with a relative or person you trust.  Be sure you understand the inherent risk and restrictions regarding your investment.  If you don't understand what is being sold, don't buy it.

During 2014, in fulfillment of its mission to protect New Jerseyans from investment fraud and regulate the securities industry in New Jersey, the Bureau of Securities obtained judgments or settlements of more than $21 million in restitution and disgorgement, and $52 million in penalties.  Thus far in 2015, the Bureau has obtained judgments or settlements of an additional $13.8 million in restitution and disgorgement, and $14.5 million in penalties.

In addition to bringing investigative and enforcement actions against firms or individuals who violate the New Jersey Uniform Securities Law, the Bureau registers securities that are offered or sold in New Jersey, conducts examinations of broker-dealers and investment advisers, and regulates the firms and individuals that sell securities or provide investment advice to New Jersey residents. 

Through its Investor Education Initiative, the Bureau also helps New Jerseyans become informed investors and promotes financial literacy.  The Bureau offers this information at public seminars and through several free publications available at its website.

The Bureau of Securities can be contacted toll-free within New Jersey at 866-I-INVEST (866-446-8378) or from outside New Jersey at 973-504-3600. The public is encouraged to visit the Bureau's website at NJSecurities.gov.

National Consumer Protection Week (NCPW) is a coordinated campaign that encourages consumers nationwide to take full advantage of their consumer rights and make better-informed decisions. NCPW 2015 will take place March 1 through March 7, 2015.

Follow the Division of Consumer Affairs on Facebook , and check our online calendar of upcoming Consumer Outreach events.

 

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Last Modified: 3/31/2015 1:29 PM