Some level of risk is associated with most investment products. Fixed income products, like bonds and certificates of deposit, may be perceived as less risky in comparison to stocks and other equity-based investments, whose returns generally fluctuate with the market.
Readers may have heard success stories about investors who took a chance on a long shot security, such as purchasing stock in an underdog company, and then reaped exorbitant financial gains when the company’s success skyrocketed. Such big wins are unlikely to come from conservative investment choices, such as bonds or certificates of deposit. Indeed, conventional wisdom holds that high returns often involve a high level of risk.
That philosophy may explain how a dozen South Florida men were able to sell over 3 million dollars in bogus stock shares to about 130 investors in just four short months. According to authorities, the 12 fraudulent telemarketers claimed to have contracts with green-technology companies, such as a wind turbine company and a manufacturer of LED lighting. The defrauded investors may have been mislead because they men mentioned real companies, such as Helix Wind Inc. and Green LED Technology LLC.
In reality, however, none of the men was authorized to sell securities in any of the companies they were promoting. Thus, after the investors wired money to the telemarketers, they waited in vain for a confirmation of their purported stock purchases.
If a stockbroker or financial adviser fails to communicate the risks of an investment product, any losses sustained by investors might become the basis of a securities fraud suit. Similarly, if an adviser misrepresents his authorization to buy and sell securities, an attorney may help defrauded investors bring a lawsuit seeking to hold the adviser responsible for that breach of fiduciary duty.
Source: Sun Sentinel, “14 charged in South Florida investment fraud ring that resulted in losses in millions,” Erika Pesantes, Dec. 19, 2013