4 Types of Issuer Fraud

If you’re in the market for securities, stay vigilant against scam artists who may impersonate legitimate advisers. Below are four common types of security issuer fraud to monitor:

1. Unregistered offerings: Some issuers may try to sell securities online without being registered or exempt from federal and state securities laws. Check with our office to confirm your potential securities adviser’s registration status.
2. Scam Pre-IPOs: Some issuers claim to offer or sell shares of their companies online, based on an imminent IPO launch. They try to exploit ordinary investor eagerness to join an IPO. In many cases, these companies don’t exist or aren’t financially ready to go public.
3. Scam Private Placements: Some issuers offer and sell shares of their companies online while promising great returns (generally supported with slick promotional materials). In a scam placement, the company doesn’t exist—and the issuer spends investor money for their personal benefit.
4. Prime Bank Schemes: Some issuers offer or sell interests in some type of prime bank instrument. Generally, they tell investors to place their money into European prime banks through a program generally available only to the very wealthy. They offer this program for a smaller minimum investment, claiming a “shortage.” They then use aggressive sales tactics to force a quick decision. The problem is that prime bank instruments don’t exist, which means the sellers pocket the money for their personal benefit.

If you have information about any of these potential securities violations, or if you want to learn more about persons issuing or selling securities or giving investment advice, file a complaint online or contact our office.