Avoiding Securities Fraud in Washington

Washington State Department of Financial Institutions, Jun 08, 2007

Warning signs for certain foreign stock scams:

• If it sounds too good to be true, it is too good to be true.
• Scammers may not be registered with the Washington State Securities Division and the Washington Secretary of State - Check it out!
• The Washington State or Seattle address given does not exist, is a false address or is a mailbox service.
• The Washington State or Seattle telephone number given is a phone message machine or answering service, so that investors can never call the scammers directly, but must always receive return calls from the scammer.
• The Washington State or Seattle telephone given is always an "unlisted" number.
• And it's worth repeating -- If it SOUNDS too good to be true, it IS too good to be true!

Beware of Reload or Recovery Room Scams:

• Investors who have purchased U.S. stock, whose price can be easily manipulated, often find themselves the victims of secondary scams based on scam artists’ representations that they will help the victim recover all or some of their losses.
• The scammers realize that many investors are desperate to recoup their losses and are vulnerable to yet another fraud. They tell the investor that they can help recover the losses by purchasing the stock or exchanging the stock for better quality securities, but only after the investor pays a fee (perhaps 30% of the investment) for taxes, deposits or a bond to facilitate the transaction.
• If an investor falls for the second scheme, he or she may be hit for yet a third time by scam artists posing as law enforcement officials or a legal firm that tells the victim that they are trying to apprehend or sue the crooks, but in order to do so will require the investor to advance additional funds (5 to 15% of the original investment) to a third party or the fictitious law firm.

Tips:

• Investigate before you invest.
• Before investing in a foreign company or with a foreign broker-dealer/investment advisor, contact the local and national securities regulatory authorities (such as the Securities and Exchange Commission) of the jurisdiction in which the company is located.
• Before investing in a foreign company or with a foreign broker-dealer/investment advisor, contact a reputable local broker to assist you in evaluating the merits and risks involved with a proposed transaction.
• Contact your own securities regulators for information about the company or the investment in question.
• Check with organizations such as the Better Business Bureau or the National Fraud Information Center.