Internet fraud is the second most common form of investment malfeasance in the land, says the North American Securities Administrators Association, which estimates that unwary investors lose US$10 billion a year, or more than $1 million every hour, to all types of scams.
"Wall Street can be a mean street for people who aren't careful with their money," said Denise Voigt Crawford, NASAA president, in a statement. "Uninformed, unsophisticated investors make tempting targets for crooks."
The top 10 issues are:
- Affinity group fraud - fraud on religious, ethnic, and professional groups by members of the same groups.
- Internet fraud - market manipulation, insider trading, and unlicensed broker and investment adviser activity.
- Abusive sales practices - sales to unsuitable investors, fraudulent offerings, and market manipulation.
- Investment seminars - state regulators watch for unlicensed activity, lack of disclosure of conflicts of interest, and hidden fees and commissions.
- Telemarketing fraud - "boiler rooms" or high-pressure telephone sales operations that peddle illegal or fraudulent investment products.
- Municipal bonds - risky bonds secured by over-valued real estate being marketed as safe, general obligation bonds.
- Immigration investments - investments that allegedly confer "alien immigration status" on foreign nationals.
- Illegal franchise offerings - inadequate disclosure and fraud in connection with the offering of franchise investments, often through business opportunity and franchise shows.
- High-tech products and services - misleading or illegal offerings of high-tech investments targeting unsophisticated investors with promises of high profits and minimal risk.
- Entertainment - scams offering opportunities in movie deals and other entertainment products with promises of guaranteed profits that minimize or ignore risks.
