What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: December 22, 2015

On Monday, the Idaho Department of Finance released its annual list of top investor threats. Among the things to look out for are unsolicited investments, especially those involving promissory notes, oil and gas deals and real estate investment opportunities, including real estate investment trusts (REITs). The top threats were determined by surveying members of the North American Securities Administrators Association. They include:

  1. Unregistered Products/Unlicensed Salesmen: The offer of securities by an individual without a valid securities license should be a red flag for investors, as should pitches of investments as “limited or no risk” and high returns.
  2. Promissory Notes: Most promissory notes available to retail investors must be registered as securities with the Securities and Exchange Commission (SEC) and the states in which they are sold. Average investors should be cautious about offers of promissory notes with a duration of nine months or less, which in some instances, do not require registration at the federal level. Short term notes that appear to be exempt from securities registration have been the source of most fraudulent activity involving promissory notes.
  3. Ponzi Schemes: The only people who make money with ponzi schemes are the promoters who set the scheme in action.
  4. Oil/Gas Investments: Fraudulent oil and gas deals frequently are structured with the limited partnership in one state, the operation and physical presence of the field in another, and the offerings made to prospective investors in states other than the initial two states. This structure also makes it difficult for authorities and victims to expose the fraud.
  5. Real estate-related investments: These include REITs, timeshare resales and brokered mortgage notes. These products carry high risk. Non-traded REITs can be risky and have limited liquidity and can be extremely unsuitable for some investors.

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