State securities chief lists
top 10 investment frauds
State securities Commissioner Ryan Ushijima yesterday announced the top 10 investment frauds, schemes and scandals that local investors are likely to see this year, as identified by the North American Securities Administrators Association.
New to the association's annual survey of state securities officials are variable annuities, mutual fund practices and senior investment fraud.
The top 10, in order of prevalence and seriousness, are:
1. Ponzi schemes, which use money from previous investors to pay new investors
2. Senior fraud, which target older investors
3. Promissory notes, which are short-term debt instruments that are bogus
4. Unscrupulous brokers, such as stock brokers who make unauthorized trades
5. Affinity fraud, in which con artists use their victim's religious or ethnic identity to gain trust
6. Insurance agents who sell fraudulent or high-risk investments
7. Prime bank schemes, where con artists promise investors high returns through access to the investment portfolios of major banks
8. Internet fraud, the online version of age-old scams
9. The mutual fund business practices scandal. More than a dozen mutual funds are under investigation for their trading practices.
10. Variable annuities, which come with strings attached, high commissions and additional costs.