The SEC’s Office of Investor Education and Advocacy warns investors that websites promoting High-Yield Investment Programs are likely scams.
Have you ever seen a website promising annual (or even monthly, weekly, or daily!) investment returns of 30 or 40 percent – or more? The hallmark of a high-yield investment program (HYIP) scam is the promise of incredible returns with little or no risk to the investor. If you come across an investment program that promises high returns with little or no risk, be aware that it is likely a fraud.
HYIPs typically involve unregistered offerings. In general, unregistered offerings are not subject to some of the disclosure requirements and other regulations that registered offerings are subject to, which are designed to protect investors. Also, fraudsters may use unregistered offerings to conduct investment scams. It’s important to research investments before investing.
Many fraudulent investment schemes involve individuals who are not licensed or registered. HYIPs typically are run by unlicensed, unregistered individuals. Check whether anyone offering or selling an investment is licensed or registered. You can do this by using the free and simple search tool on Investor.gov.
The websites also allegedly included graphs to illustrate purported performance of the defendants’ fictitious mutual funds:According to the SEC’s complaint, one of the websites also offered a seemingly detailed Annual Report, and a Fund Fact Sheet and Prospectus, as well as a chat window where potential investors could communicate as they made their investment decisions. The SEC alleges that in an apparent effort to drive more traffic to that website, a defendant created an account with a news distribution service to have a press release distributed across multiple digital media outlets. The SEC’s complaint states that the defendants raised $4.1 million from investors and that the defendants never made any investments. Instead, according to the SEC’s complaint, the defendants stole the bulk of the money for their personal benefit and used a small portion of the money raised from investors to provide supposed dividend payments to other investors.
Anytime you encounter an investment “opportunity” guaranteeing high returns with little or no risk, do not hand over your hard-earned money. Instead, report it to the SEC.
Click on the image above to learn about the Office of Investor Education and Advocacy’s initiative to provide a compelling and interactive way to help educate investors on how to avoid investment fraud.
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Report possible securities fraud to the SEC online at www.sec.gov/tcr.
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