Editor's Note: This blog was originally published before the CARES Act became law. To learn how the Act affects RMDs, please read our recent blog... Read this article »
Founded in 1989 and one of the first self-directed IRA custodians, PENSCO has extensive experience with the issue of investment fraud, and want to encourage all clients to seek guidance when choosing your investment. We also regularly share our insights on how to protect yourself from investment fraud on our blog.
Detecting fraud from the outset
While it’s ultimately your responsibility as the IRA owner to conduct due diligence and evaluate potential investments, we actively make our clients aware of investment fraud warning signs. Some of signs of a potentially fraudulent investment include red flags such as:
- Promise of excessive rates of returns
- Assurance that the investment is “safe and secure”
- “Boiler room” tactics
- Pressure to “act fast”
- Any tone of desperation (e.g., “I need to make payroll”)
- Missing pages or incomplete documentation
- Unprofessional or hard sell marketing presentations
- The promoter’s professional background is inconsistent with the investment idea
- Any mention of insider information
How do I report investment fraud?
If you know or suspect you are the victim of investment fraud, please notify PENSCO immediately by calling (800) 962-4238. You should then also file reports with the following key agencies:
- The Securities and Exchange Commission (SEC) is the primary regulator for the U.S. securities market. Go directly to their Enforcement Tips and Complaints page, which includes instructions on their reporting process.
- Your state's regulatory authority may also have a complaint process. Refer to the list of state regulatory offices maintained by the North American Administrators Securities Administration.