Would You Know A Ponzi Scheme?

The SEC has continually warned investors about Ponzi schemes.

A Ponzi scheme is defined as ” an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business.”

Warning signs:

  • High return, little risk
  • Consistent high returns
  • Unregistered investments
  • Unlicensed sellers
  • Secret or highly complicated investment strategies
  • Untimely or no reporting of results or returns
  • Hard to get your money out

Read more from the SEC here: http://www.sec.gov/answers/ponzi.htm

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
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