When New York residents want to invest their money, they typically trust financial professionals to guide them through the process. Sometimes, though, someone may embezzle money instead of investing it. It is important for people to recognize different kinds of investment fraud and understand how they can protect themselves.
There are many types of investment fraud. SaveAndInvest.org says that sometimes people might use a kind called advance fee fraud to embezzle money. When people use this kind of fraud, they typically ask someone to pay a fee before they buy stock that is not worth much. In a pump-and-dump scheme, people sometimes think that a particular stock is favorable and purchase it at a high price. In this situation, though, the information about the stock was false, and people find that their stock is worthless.
There are many ways people can protect themselves from investment fraud. According to the U.S. Securities and Exchange Commission, people can protect themselves simply by being knowledgeable. When people are familiar with different kinds of fraud, they are more likely to recognize a scam before they have invested their money. Additionally, it is important for people to do thorough research. Many people might read a company news release or an email and become excited about an investment opportunity. Others may speak to someone who seems like a legitimate investor and feel that he or she is trustworthy. However, before they invest with a company, people should usually look over the company's financial statements and make sure they are familiar with the services and products. Additionally, people should generally research investors to make sure he or she has the proper qualifications.
It is also important for people to make sure they are not pressured to buy a certain stock. They should typically be wary if someone tells them that they need to buy stock immediately or emphasizes that many people are investing in a certain product or company. Additionally, it is beneficial for people to be careful when they hear that a certain investment has no risk.