FINRA Warns of Social Media-Linked Investment Schemes
The Financial Industry Regulatory Authority (FINRA) has issued a warning to investors regarding high-yield investment programs (HYIPs), which are Internet-based Ponzi schemes. These HYIPs claim to offer extraordinary returns of 20% to 100% or even more per day. FINRA warns that these HYIPs are unregistered investments that are being sold by unlicensed individuals.
FINRA advises that these investments are scams that are being promoted via social media, including Facebook, Twitter, and YouTube. Investors are unfortunately convinced that these investments are legitimate by the sophisticated promotions by the scammers.
Unfortunately, the number of HYIP scams is growing significantly. The Federal Bureau of Investigations (FBI) says that the number of new HYIP investigations grew more than 100% from 2008 – 2009. Further, these HYIPs are occurring worldwide. A recent scheme, Pathway to Prosperity, allegedly defrauded 40,000 individuals in 120 countries of $70 million.
FINRA warns that these HYIP schemes are merely Ponzi schemes. In fact, FINRA Senior Vice President John Gannon, explains that “some of these schemes encourage people to bring in new victims, while others entice investors to ‘ride the Ponzi’ by attempting to get in and get out before the scheme collapses.” Further, many of the fraudsters pay current investors bonuses, of up to 25%, for referring new recruits or victims.
In conclusion, beware of fancy unsolicited or solicited investment promotionals. Make sure you always thoroughly research any investments and be especially skeptical of promises of high returns. Often the promise of a high return, is the first sign that an investment is a scam.
For more information regarding investment fraud, please visit our website at www.dossfirm.com or contact one of our attorneys for a free consultation.