Avoiding Investment Fraud
Posted on May 1, 2012 by bob in Financial
Most investment frauds involve individuals and/or companies who offer investment opportunities without being properly registered (licensed) with the Alabama Securities Commission (ASC). ASC estimates that unregistered people making illegal investment offers account for almost 90% of all crime and convictions for violation of the Alabama Securities Act. About half of the securities violations are committed by fraudsters who are out of state. The Alabama Securities Act requires the registration, or specific exemption from registration, “…of anyone who offers to sell securities, who provides financial advice for a fee or who offers investment products to any Alabama citizen.” This includes broker-dealer firms, their agents, investment adviser firms and their representatives, issuer agents, and money transmitters.
The ASC’s Registration Division is charged with the initial and ongoing registration, licensing, audit, examination and statutory compliance of individuals and firms who market and sell securities and financial services within, into or from Alabama. This division is also responsible for the processing of fees associated with registration and license applications and renewals. In FY 2011 registration fees, plus fines and settlements for violation of the securities law, produced $17,776,255 in revenue, allowing ASC to remain self-funded. For each of the last five fiscal years ASC’s average contribution to the Alabama General Fund, after all costs of operation, exceeded $9 million.
Your first defense against securities fraud is to check it out BEFORE you invest. Any Alabama citizen can contact the ASC’s Registration Division to inquire if a particular investment – and the person or company offering it for sale – is registered to conduct securities business in Alabama. Citizens can also receive a free background check on any person who offers a security by calling 1-800-222-1253.
The system of licensure and registration promotes continued professionalism in the securities industry in Alabama for those offering and selling various financial products and services. ASC’s free service to our citizens is a crucial step to take before handing over their hard-earned savings to anyone offering an investment opportunity. Investigating with our Registration Division before investing is practicing excellent due diligence and can prove to be the best defense against investment fraud. Additionally, the ASC’s Auditing and Examinations Division conducts on-site auditing and examinations of all state-regulated investment advisers and broker-dealers and their branch offices domiciled in Alabama. The audit process aids in strengthening companies’ compliance programs to more efficiently serve and protect Alabama investors.
Contact the ASC at the number listed here with inquiries concerning securities broker-dealers, agents, investment advisers/representatives, financial planners, registration status of securities or debt management programs, and to report suspected fraud or to obtain consumer information.
The ASC website (below) includes free investor education and fraud prevention material, a link to request a free educational presentation, news releases about true crime stories in Alabama, and a Protect Alabama Troops link for active and retired military personnel, their dependents, and all veterans who served to protect our great country.
If you have questions, concerns or complaints about financial products, contact the ASC at the website below, or call or e-mail Dan Lord, Education and Public Affairs Manager, 334-353-4858, dan.lord@asc.alabama.gov (or toll-free 1-800-222-1253). The ASC is located at 401 Adams St., Montgomery.
ASC website – www.asc.alabama.gov
Joseph Borg, Exec. Dir., ASC
This article is provided by a generous grant from the Investor Protection Trust, www.investorprotection.org.
