Ohioans Urged To Be On Guard Against Investment Fraud In 2012

With the New Year, many Ohioans may be looking to rework their investment strategy for 2012.  David Goodman, Director of the Ohio Department of Commerce, said the new year is a good time for Ohioans to review their investments and set their investing goals.

First and foremost, Director Goodman has a cautionary message for Ohio investors.  “No matter how tempting it might be, Ohioans should resist pursuing risky investing bets to overcome any losses they may have suffered during the financial crisis,” said David Goodman, Director of the Ohio Department of Commerce.  “It is important to be aware of con artists who prey on peoples’ fears with false promises of ‘guaranteed’ returns at no risk.”

Earlier this year, the department’s Division of Securities issued its top five list of the most prevalent investment schemes being perpetrated against Ohio investors. The top five investment scams are:

• Ponzi schemes
• Unlicensed and unregistered sales
• Affinity fraud
• Promissory notes
• Distressed real estate schemes

Director Goodman said that it is important for prospective investors to be aware of these and other potential scams now and in the new year. To protect against investment fraud, he encourages Ohioans to:

• Make sure the person promoting the investment (no matter how well you know them) is licensed by and the security is properly registered with the Division of Securities.
• Be leery of family and friends singing the praises of a particular securities salesperson or investment.
• Be skeptical when promised unusually high or unrealistic returns.
• Read the prospectus or offering circular in full.
• Take the time to understand the investment and to ask questions.  Do not be pressured to make a decision on whether to invest.

In assessing one’s investments and strategy for the new year, Director Goodman encourages Ohioans to:

• Define the purpose for saving and investing.
• Set short-term and long-term financial goals.
• Establish a comfortable level of risk tolerance that fits your personality and investment goals.
• Consider which saving and investing products best match your goals and risk tolerance (including employer-sponsored plans.)
• Stay disciplined.

Before investing, Ohio Securities Commissioner Andrea Seidt encourages investors to call the Division’s Investor Protection Hotline at 1‑877-NVEST411 (1-877-683-7841) to ask:

• Is the brokerage firm and salesperson licensed to sell securities in Ohio?
• Have any enforcement actions been taken against them?
• Has the security been properly registered with the Division of Securities?