South Florida is one of the nation's prime spots for investment fraud, with wealthy college-educated men -- aged 55 to 65 -- especially preyed upon, according to the nation's largest private industry watchdog group that oversees brokerages.
John Gannon, a senior vice president with the Financial Industry Regulatory Authority (FINRA), is trying to get the word out to unsuspecting targets of investment con artists.
"I think that South Florida is targeted more than other parts of the country for a couple of reasons,'' said Gannon, who oversees FINRA's investment education efforts. "One, there is a large population of seniors [age 55 and above] and two, they have significant assets.''
Here are five ways Gannon says you can avoid becoming a victim:
Make sure the broker and the proposed investment are registered with the U.S. Securities and Exchange Commission. Madoff's investors might have realized decades earlier that something was amiss if they had checked on whether his investment fund was registered with the SEC. It wasn't. "That should have been a red flag,'' Gannon said.
Don't invest with a particular planner or company just because other family, friends or business acquaintances have. Realize that con artists prey on groups of people, he said. Some of Ponzi schemer Bernard Madoff's clients, for example, came from the Palm Beach Country Club where he was a member.
Carefully read the investment document or prospectus -- and back off if there aren't any or the materials are so vague you don't understand what you are getting yourself into. After Madoff's arrest, many of his investors later could not describe the investment strategy other than it was "complicated,'' Gannon said.
Distrust any investor who promises a guaranteed return. Madoff was able to produce steady returns when other funds weren't because his investments were bogus, Gannon said.
Don't be charmed by a charismatic broker, who may dress well and live ostentatiously. Check his or her background, licensing and registration by visiting the FINRA website at www.finra.org/brokercheck.
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