A large percentage of U.S. investors could be convinced to invest into a “guaranteed return” investment scam, according to a poll by “Money-Track,” a public-television series, and Investor Protection Trust, an investor education group.
The poll surveyed investors regarding eight basic investment principles, such as the definition of diversification and inquiring into to the background of financial professionals. When presented with questions to determine their fraud tolerance only 1% of the 1255 persons surveyed responded correctly on all eight principles.
Given investment swindle scenarios, such as the opportunity to invest into an options-trading system which guaranteed returns of at least 100%, 43% of investors responded indicating they would take the bait.
“Everyone wants to believe that they can make a ‘quick score'” said Don Blandin, president and chief executive of Investor Protection Trust in Washington. “They have to understand that there isn’t going to be any overnight ‘rags to riches’ for the majority of people.”
According to the survey, two-thirds of those participating would meet with a financial professional without seeking a background check such as though the Securities and Exchange Commission, National Association of Securities Dealers (NASD) or state securities regulors.
Many investors need help preparing for retirement. Half of those surveyed said they had not created a financial plan. Only forty percent said they expected Social Security to make up a major part of their retirement income.
Other surveys have demonstrated that sophisticated investors are more easily victimized by investment fraud than those less knowledgeable. Yet, many investors hesitate to file claims to recover losses because they fear appearing foolish.
Losses can also be caused by negligent actions of investment firms or advisors. WhIle most people would not hesitate to ask for compensation for repair or medical costs if involved in a car wreck, some hesitate to seek just compensation when negligent acts cause investment losses.
We at Shepherd Smith and Edwards represent investors in claims for losses caused by negligent or fraudulent acts by investment firms and advisors. If you or your company has sustained significant investment losses, contact Shepherd Smith and Edwards to schedule a free confidential consultation with an attorney.