Many Texans may have heard the terms investment fraud and securities fraud but may not know exactly what those terms refer to. The Texas State Securities Board offers consumer education options. Because of the potential risks inherent in investing in securities, the industry is regulated at the state and federal levels. The State Securities Board regulates the securities industry in Texas and registers all securities, securities dealers, agents and salesmen, as well as investment advisors, in Texas. Securities are also regulated by the federal Securities and Exchange Commission.
Investment fraud scammers are often not registered with the State Securities Board and often promise high rewards with little risk. Typically, the higher the risk, the higher the reward and the lower the risk, the lower the reward. Fraudsters may be selling supposedly secret tricks, special funds, or hot tips about soaring stocks. They will commonly promise that their schemes are safe and guarantee results they are unable to legitimately deliver.
Red flags when investing include a claimed need for secrecy and a claim of urgency when investing. It is generally better to work with professional and registered securities dealers. In addition, it may be unethical to sell certain types of securities to the elderly. It is important to seek education and a solid understand understanding of investments and securities before investing to avoid being victim of investment fraud. The past performance of a particular investment may be helpful when evaluating it but is not a guarantee. With virtually any investment, investors may not make money and can even lose money.
In circumstances when individuals find themselves victims of investment fraud, additional legal options and protections may be available to help them. These options include commencing securities fraud class action litigation in order to recover losses.