4 Common Frauds Usually Made By Investment Fund Companies

Investment frauds generally involve getting you to put up cash for a dubious investment – or one that does not exist at all. In most cases, you are going to lose some or all of your finances. Following are four common frauds usually done by investment fund companies.

Advance Fee Scheme

When it comes to an advance fee scheme, the victim is influenced to pay money upfront to take benefit of an offer promising considerably more in return. The catch is that the fraudsters take the money, and the prey never hears from them again. Fraudsters often target small businesses acting as small business loan providers that have lost their money in a speculative investment. They will contact the financier with an offer to support them in recovering their losses. They might say they will purchase or exchange the investment at a considerable profit to the financier, but the investor should first pay a “refundable” fee, deposit, or taxes.

Boiler Room Fraud

Investment frauds are mostly conducted by a group of people who arrange a makeshift office known as the boiler room. To convince the prey that the company is real, they may send you the company’s website, which is going to look extremely professional. They may also set up a toll-free number along with an address to make the company appear legitimate. However, this company just does not exist; everything on the website is fake. By the time the prey realizes you have lost the money, the fraudsters will have closed down and moved on.  

Exempt Securities Fraud

If a company wishes to sell securities in any company, it should file a prospectus with the security regulators. Exempted securities are an exception. They might be sold without any prospectus, but they are limited to accredited investors on various other conditions. When on their own, exempt securities are not considered as frauds. However, fraudsters pitch their fake investments as “exempt” securities.     

But some Fraud mers pitch fraudulent investments as “exempt” securities. Be extremely suspicious about unsolicited phone calls or emails regarding a hot tip on a promising business that is just about to “go public.” You might be told that the investment is merely available to exceptionally wealthy people, but an exception is going to be made for you. You might be asked to sign some papers that misrepresent your income.

Forex Fraud

The foreign exchange (Forex) market is thought to be one of the largest and most liquid financial markets. Investors can buy as well as sell currencies to generate finances on changes in the exchange rates. However, trading in foreign currencies can be extremely risky. Forex advertisements endorse easy access to the foreign exchange market, every so often through courses or software. However, foreign exchange trading is subjugated by large, well-resourced international banks with extremely trained staff, access to leading-edge technology, and large trading accounts. It is challenging to beat these experts continually. You might not be told how risky Forex trading is. Furthermore, some Forex trading schemes might be illegal or duplicitous. As Forex trading services are mostly operated online from another country, unregulated companies might be marketing all their services outside the rules.

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