Affinity fraud is not a singular specific type of fraud but is rather defined as any and all frauds targeted towards members of an identifiable group of individuals such as those with a common religion, ethnic heritage, background, or...
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Investor Protection Guide: Equity-Indexed Annuities
An Equity-Indexed Annuity (“EIA”) is a financial product from insurance agencies that offers a minimum guaranteed return combined with a return linked to a market index. EIAs involve an “accumulation period,” when an investor makes a lump sum...
Investor Protection Guide: Internet Fraud
The Internet can serve as an efficient tool for investors, but it is also an excellent tool for defrauders. The Internet allows individuals or companies to reach tens of thousands of people by building a web site, posting a message on an online...
Investor Protection Guide: Investment Newsletters
Some companies pay people to write online newsletters recommending their stocks, which are referred to as investment newsletters. Federal securities laws require the newsletters to disclose who paid for their product, the amount, and the type...
Investor Protection Guide: Investment Seminars ("Free Lunch")
Financial seminars are a marketing tool often used by broker-dealers and other entities to attract prospective clients. These seminars may be invitation-only or they may be advertised in local papers or on the internet. Financial seminars are...
Investor Protection Guide: Micro-cap Stock Fraud ("Pump and Dump")
"Pump and Dump" is a type of stock fraud involving the use of false or misleading statements to increase stock prices and then sell the inflated stocks to the public. Stocks of microcap companies, which have low capitalizations and limited...
Investor Protection Guide: Misleading Senior Designations
Financial advisors may be designated “senior specialists” in order to imply a certain level of training and expertise regarding issues of importance to senior citizens. The Consumer Financial Protection Bureau (CFPB) reports that there are...
Investor Protection Guide: Ponzi Scheme
Named after Charles Ponzi, who infamously bilked investors out of millions of dollars in the 1920s, a Ponzi scheme is an investment scam that involves the payment of abnormally high "returns" to investors that are actually paid from money...
Investor Protection Guide: Prime Bank Schemes
Prime bank fraud is a type of investment scheme that promises extremely high yields over a short period of time. Individuals claim that they have access to secret financial products which they can buy at a discount and sell at a premium. In...
Investor Protection Guide: Promissory Note Scam
In a promissory note scam, the individuals perpetrating the scam often stay behind the scenes. They persuade others to sell promissory notes by promising them large commissions. The individuals who sell the promissory notes to investors often...