With CD yields at their lowest levels in years, investors are increasingly vulnerable to fast-talking scam artists. State securities regulators have issued a list of the “Top Five” investments to be wary about.
Bogus promissory notes. These are short-term debt instruments promising returns of up to 12% monthly from little-known companies.
“Callable” CDs. These higher-yielding certificates of deposit may be appropriate for some investors but they won’t mature for 10 to 30 years unless the bank redeems them. Redeeming these CDs early may result in a loss of up to 25% of the principal.
Internet stock pitches. Con artists frequently use the wide reach and relative anonymity of the Internet to “pump and dump” stocks in little-known companies, often claiming tragic events such as the terrorist attacks on the World Trade Center and the Pentagon will push up the stock price.
Prime bank schemes. Scam artists, often operating over the Internet, promise investors returns as high as 300% through access to the investment portfolios of the world’s elite banks. Purveyors of these schemes may tout access to the “secret” investments used by the world’s wealthiest families.
Viatical settlements. Buying interests in the life insurance policies of others is always high-risk and sometimes deals are fraudulent.
