5 Signs of Investment Fraud

Investment fraud comes in many forms, from Ponzi schemes to high-yield investment programs. It’s important to understand how these “investment opportunities” operate so that you can avoid becoming a victim of investment fraud. In this brief article, a fraud defense attorney in Tampa with The Rickman Law Firm covers some of the top warning signs associated with investment fraud that you should know about in order to protect yourself.  

Related: Types of Fraud Cases

High Returns with No Risk

As a general rule, investments with higher risks offer higher potential returns. The promise of above market return with little to no risk is one of the first signs of investment fraud. As with any investment, there’s no guarantee that you’ll make money, so it’s important to be wary of any guaranteed investment opportunities. Consistent track records of positive returns are most likely too good to be true due to the nature of investment trends and the risk-return relationship. 

Unregistered Investments

Any legitimate investment company should be registered with the Securities Exchange Commissions (SEC), the National Association of Securities Dealers (NASD), or your state securities regulator. Unregistered investments are not required to comply with the regulations that protect investors in publicly traded stocks or bonds. Without registration, it will be difficult to seek compensation for any losses you incur. Before investing, check whether the firm or the person selling the investment is unlicensed or unregistered.

High Pressure Sales Tactics

Be wary of manipulative sales pitches that make use of high pressure sales tactics designed to rush you into making a decision you will later regret. Any legitimate, lucrative investment will not be marketed as a “limited time offer” that “may be gone tomorrow.” Salespeople use these tactics to place a sense of urgency on their investment opportunity to convince you into entering the scam without properly understanding the investment. Always take the time to analyze the claims put forth by the prospective investment before accepting risk or placing your trust in the salesperson.  

Related: 8 Ways You Can Be Accused of Fraud


Exclusivity frequently points to potential investment fraud, especially when you are promised “secrets” to good investing or “inside information” not made available to the general public. Not only are there no true “secrets” to good investments but profiting from inside information is illegal. Additionally, steer clear of any invitations to join exclusive investment organizations or select groups of financial experts and active investors. 

Lack of Transparency

Your investment account should be registered separately in your name by an independent, third-party custodian, with all transactions visible to you on a daily basis. Avoid any and all investment opportunities where you are encouraged to commingle or aggregate your assets into an account or pool with other investors who have paid into the investment. The manager should not have possession or custody of these commingled funds nor generate account activity statements. If these practices are occurring, you are most likely involved in investment fraud. 

If you have been accused of investment fraud, it is imperative that you consult with a fraud defense lawyer in Tampa from The Rickman Law Firm. 

For a free consultation with a fraud defense attorney in Tampa, please contact The Rickman Law Firm today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. 


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