investment fraud

Investment fraud has been alarmingly increasing partly due to the popularity of investing online.

Although the Internet is a great tool for investors to make investments and research, it is also a platform for investment fraudsters.

In the online world, it is sometimes hard to distinguish between credible and non-credible investment presentations. However, there are some popular formats that the fraudsters may use when operating online.

The SEC (Securities and Exchange Commission) reports the most popular of these formats to include:

• online investment newsletters
• bulletin boards
• e-mail spam

There are hundreds of investment newsletters online, and there have been fraud related to some of the newsletters.

Some of the fraud formats include lies about the payments the newsletter publishers have received, their independence, their so-called research, and their track records.

Fraud newsletters masquerade as sources of unbiased information, while in reality they stand to profit if they can convince investors to buy or sell particular stocks.

Web based bulletin boards are used by fraudsters to promote a company or pretend to reveal "inside" information about upcoming announcements, new products, or new contracts.

A single person can manipulate the discussion to create the illusion of widespread interest in a small, thinly-traded stock by posting a series of messages under various aliases, then profiting if enough investors are convinced to buy or sell those stocks.

Spam, or junk e-mail, is a cheap and easy medium for fraudsters.

These investment fraud schemes online increasingly use e-mail to find investors for bogus investment schemes or to spread false information about a company.

In addition to online fraud on investments, there are various types of off-line fraud.

Detecting Investment Fraud

Online and offline fraud on investments is monitored by law enforcement authorities as well as securities organizations, such as Securities and Exchange Commission.

These resources are also good places to start looking for ways to avoid scams and fraud, as well as reading about recent cases in this field.

The resources that list methods to detect fraud and scams include:

• sec.gov/investor/pubs/cyberfraud.htm
• ftc.gov/reports/Fraud/invest.htm
• fraudbureau.com/investor/
• dmoz.org/Society/Issues/Fraud/Investment/ (for still further resources)
  
  
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