DENVER — In recognition of National Consumer Protection Week, the Colorado Division of Securities (the “Division”) announces the top investor threats for 2021 as anticipated by state regulators across the country and regulators in Mexico and Canada.
In the results of an annual survey conducted by the North American Securities Administrators Association (NASAA), of which the Division is a member, schemes promoted through online and social media activity were identified as the top threats facing investors this year.
Ranked second were precious metals-based and cryptocurrency related investments, especially those purchased through self-directed individual retirement accounts. Self-directed retirement accounts generally lack the services and protections provided by firms offering traditional IRAs and can be fertile soil for scammers.
Foreign exchange-related schemes rounded out the top three threats. In particular, enforcement officials expect to see a resurgence of high-yield foreign exchange schemes disguised as membership or investment programs.
The NASAA survey indicated that 82 percent of state and provincial securities regulators anticipate that bad actors will attempt to leverage investor fear and anxiety related to changes in financial markets and the economy due to COVID-19 to promote fraudulent schemes.
“Bad actors always try to leverage vulnerabilities wherever they can be found. We expect to see an uptick in complaints from investors lured into programs offering the promise of high returns as a way to supplement income lost as a result of the pandemic,” said Colorado Securities Commissioner Tung Chan.
The Division warns investors that investment offers that sound “too good to be true” often share similar characteristics. The most common telltale sign of an investment scam is an offer of guaranteed high returns with no risk. All investments carry a degree of risk, including the risk that some, or all, of the invested funds could be lost.
“During times like these, unscrupulous scammers will play on our economic worries more than ever with promises of no-risk high returns. But it’s important to remember, anyone who says their investment offer has no risk is not being honest,” Commissioner Chan said. “Investing is a long-term proposition. Get-rich-quick schemes are built on empty promises and empty pockets.”
Commissioner Chan recommends that investors should always ask if the salesperson is properly licensed and if the investment itself is registered or exempt from registration. This information can be confirmed by Division staff. “Working with a properly licensed investment professional affords investors an additional layer of protections,” she said. “Offering to sell an investment without meeting certain licensing and registration requirements is against the law.”
Before making any financial decisions, ask questions, do your homework. For help, contact the Division by phone at 303-894-2320, by fax at 202-861-2126, or by email at dora_securitieswebsite@state.co.us.
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About the Division of Securities:
The Division of Securities exists to protect investors and maintain confidence in the securities market, while avoiding unreasonable burdens on the marketplace by licensing securities professionals, enforcing securities law violations, and helping Coloradans become more informed investors.
About DORA:
DORA is the state's umbrella regulatory agency, charged with managing licensing and registration for multiple professions and businesses, implementing balanced regulation for Colorado industries, and protecting consumers. Our nearly 600 employees are dedicated to preserving the integrity of the marketplace and promoting a fair and competitive business environment throughout Colorado.