| In recent years, there has been a massive | | | | spreading bad rumors about the company to |
| proliferation of investment scams circulating the | | | | drive the stock price down so he or she can buy |
| internet. I receive up to 5 emails every day | | | | it back at a low price before returning the shares |
| containing these scams. The internet is a fantastic | | | | to the original owner. |
| resource for investors, providing real-time stock | | | | You should also steer clear of any emails you |
| quotes and access to current research and | | | | receive about offshore investing or prime banks. |
| analysis. However, the lack of regulation in | | | | Offshore companies, thanks to the internet, are |
| cyberspace enables financial gurus and hucksters | | | | no longer faced with obstacles such as direct mail |
| to perpetrate their money-making flimflam on a | | | | or long distance telemarketing. Promises of huge |
| daily basis. | | | | returns from offshore investments are usually |
| Pyramid schemes are one of the most common | | | | totally bogus. Another scam you need to be wary |
| forms of investment fraud pervading the net. | | | | of involves prime banks. Prime banks are the top |
| With these, you are asked to contribute a certain | | | | 50 banks in the world. Internet hucksters will ask |
| amount of money, and then you are promised a | | | | for your money so that they can invest it in |
| return when new investors make their | | | | risk-free, high yield prime bank financial |
| contribution. Eventually, the pyramid collapses | | | | instruments. However, they will likely invest your |
| when money owed to the previous investors is | | | | money in high risk, speculative investment vehicles |
| more than what can be raised. | | | | that have absolutely nothing to do with prime |
| Next on the list is an outright illegal practice called | | | | banks. Avoid prime bank solicitations like the |
| the pump and dump. This is when a small group | | | | plague. |
| of investors who hold a large number of shares in | | | | I hope this information will help you avoid falling |
| a company go around hyping the stock to the | | | | prey to investment scams. However, do not be |
| uninformed public. The resulting frenzy drives up | | | | afraid to invest in companies just because there is |
| the price of the stock, at which point the | | | | some pumping and dumping. Just because a few |
| aforementioned small group of shareholders dump | | | | shareholders decide to pump up a stock for their |
| their shares at a high price before the general | | | | own selfish gain, does not mean that the |
| public knows that the stock is worthless. | | | | company is not a good investment. People have |
| Sometimes, pump and dumpers will engage in | | | | made fortunes on the stock market by investing |
| short selling (short selling is a perfectly legal and | | | | in relatively new companies before anyone else |
| legitimate practice, whereby you borrow stock | | | | knew about them. Those who did not invest in |
| from someone else and immediately sell it, hoping | | | | these companies because they thought they |
| that the price of the stock will go down in the | | | | were pure hype lost out on a chance to make |
| near future so that you can buy it back at a | | | | millions. Use your common sense when deciding |
| lower price and return it to the person who | | | | whether or not you want to invest in a relatively |
| loaned it to you at a profit). With pump and dump | | | | unknown company. Do some research before |
| short selling, the borrower sells the stock that | | | | you invest in and you should do fine. |
| was loaned to him and then goes around | | | | |