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News | News Release Contact: Katha Treanor, (804) 371-9141
For Immediate Release: August 21, 2012
Listenspeaker image SCC CAUTIONS VIRGINIANS REGARDING NEW AND OLD INVESTOR THREATS

RICHMOND — The State Corporation Commission (SCC) urges Virginians to use caution when seeking safer and more profitable places to put their money amid continued economic uncertainty and a changing investing landscape.

Unwary investors continue to be introduced to longstanding or emerging threats. The most recent rash of suspect offers attempts to exploit new and existing federal laws designed to promote job creation and stimulate economic recovery.

Ronald Thomas, director of the SCC’s Division of Securities and Retail Franchising, encourages Virginians to investigate thoroughly before investing their hard-earned money. He reminds investors that even some legitimate investment opportunities may be risky and complex and may not be suitable for a particular individual.

“Be especially wary of investment opportunities that promise high returns with little or no risk,” Thomas said. “Before you invest, find out if both the salesperson and the investment are registered in Virginia and obtain written information that fully explains any investment before you hand over your money.”

Thomas urges investors to be wary of the following new investment opportunities:

  • Crowdfunding and Internet Offers – An online money-raising strategy designed to make it easier for small businesses and startups to raise capital, crowdfunding is a provision of the Jumpstart Our Business Startups (JOBS) Act enacted by Congress in April, 2012. Rules implementing a new exemption to allow crowdfunding are not expected to be adopted by the Securities and Exchange Commission until early 2013. Until those rules are adopted, any offers or sales of securities that claim to rely on the crowdfunding exemption are unlawful under federal securities laws. Investments through crowdfunding will not carry the same consumer protections as other investment offerings and even legitimate offers will carry a certain degree of risk.
  • Use of Self-Directed IRAs to Mask Fraud – To lend credibility to fraudulent ventures, offerers may misrepresent the responsibilities of self-directed IRA custodians or exploit the tax-deferred characteristics of these investment products. Self-directed IRAs allow investors to hold alternative investments such as real estate, mortgages, precious metals, and private placement securities for which financial and other information may not be readily available. While self-directed IRAs can be a legitimate way to hold retirement assets, investors should be mindful of potential fraudulent schemes when considering investments for their self-directed IRA.

“Investors should insist on working only with licensed securities brokers and investment advisers in dealing with both traditional and alternative securities investments, and should quickly report any suspicion of investment fraud to their state securities regulator,” Thomas said.

For more information, call the Securities Division in Richmond at (804) 371-9051 or toll-free in Virginia at 1-800-552-7945 or visit its website at www.scc.virginia.gov/srf or visit the North American Securities Administrators Association’s website at www.nasaa.orgExternal Link logo.

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