Investing: Protect What's Left

FOR IMMEDIATE RELEASE
July 16, 2009

Everyone is thinking it: I can't afford to lose any more money. What they're thinking about is market risk – the risk that stock prices will resume their downward trend, and go down day after day. But there are other risks to the value of your investments that you should also be think about.

News over the last several months has reminded us that investment fraud can happen to anyone. And you might be particularly vulnerable now because of your losses. When you're worried or scared you're more likely to listen to sales pitches that you otherwise would ignore, especially when those sales pitches promise to protect your remaining money or help you regain your losses with little risk.

How can you protect yourself against fraud? While there's no perfect system for detecting fraud, there are signals you can watch for. These flags don't mean that fraud is taking place, but they do indicate that there's a possibility. Some flags are:

• You are promised unreasonably high, guaranteed returns.
• The sales person contacted you out of the blue, or through a dinner seminar.
• You heard about the investment in an email from a stranger, in an online bulletin board or discussion forum.
• The salesperson won't discuss the risks, or won't provide written information.
• You are supposed to keep this investment opportunity a secret, or you've been specially selected.
• The salesperson or adviser is not licensed to sell the product.
• The investment is not a registered security – you can't track its performance with publicly available information.
• You're no longer receiving regular statements from the custodian of your account.

Doing your homework can help you detect and avoid fraud. You should do a background check on an investment adviser at http://www.adviserinfo.sec.gov/ or a broker at www.finra.org/brokercheck. You can check that the security itself is registered for sale in your state. In Illinois, check the registration of a particular

security by calling 1-800-628-7937. In other states, you can find a link to your state's securities regulator at http://www.nasaa.org/.

For more tips about avoiding investment fraud, go the University of Illinois Extension's website, Plan Well, Retire Well: Your how-to guide (anonymous registration required) at www.RetireWell.uiuc.edu. There's an entire section on Investment Fraud, including examples.

You can also protect yourself by learning more about how to choose a financial professional, the licenses and designations to look for, and which professionals have a fiduciary responsibility to you as their client. Learn about these issues at http://web.extension.uiuc.edu/financialpro/.

Source: Karen Chan, Extension Educator, Consumer and Family Economics, University of Illinois Extension, 708-352-0109, chank@uiuc.edu