Posted: October 9th, 2015
Alert lists red flags and best practices for avoiding fraud
A relatively recent increase in fraud schemes involving oil and gas ventures has caused the Securities and Exchange Commission to issue an investor alert that educates investors by bringing to their attention the possibility of fraudulent endeavors and the warning signs they should be aware of.
The alert, originally posted in May 2013, is still relevant today, as the SEC recently announced charges in regards to an oil and gas scheme in California involving upwards of $12 million from more than 300 investors nationwide. <This would be a good place for an internal link to the other blog on Schumacher>
It is essential, according to the alert, for investors to be vigilant when considering an investment in something that could sound promising, as in the case of the development of oil and gas resources. This means asking questions about the legitimacy of the venture, including whether a security is registered with the SEC, whether the person making the offer is registered as a broker with the SEC and a member of the Financial Industry Regulatory Authority, or FINRA, and whether it’s appropriate for you and your investment goals, to name a few.
If the answer to any of those questions is no, the SEC suggests staying away from the investment. As an investor, you should also request a due diligence report to validate that the broker has truly researched the investment and its risks. The alert also advises that even if a broker is registered with FINRA, it is important that you do your research to discover whether or not the broker has any personal interest in the investment, as that could be a red flag for potential fraud.
The alert lists other potential red flags investors should be on the lookout for, including claims that seem too good to be true, extremely high rates of return or high pressure placed on the investor to take part in the venture.
According to the alert, investors should be well aware of exactly what the investment entails: this means receiving everything in writing and asking for specific details, such as the involved parties, use of investor funds, and prior experience and history in the industry. If anyone is hesitant or unwilling to provide that information, investors should be cautious about becoming involved with the investment.
While the alert is extensive, it is not exhaustive, and the SEC and FINRA both warn that oil and gas frauds are an ongoing problem. If you are a victim of investment fraud, you may be able to recover your financial losses through securities arbitration. Silver Law Group represents the rights of investors nationwide. Contact us today to have your case reviewed by one of our experienced securities arbitration attorneys.
OUR FREE PROMISE NO RECOVERY, YOU OWE US NOTHING
To contact our attorneys please fill out the form below.