The investment marketplace remains a dangerous place for unwary seniors and their advisors. To help everyone stay safe, the North American Securities Administrators Association (NASAA) has released its annual list of products that threaten to trap investors.
According to NASAA, several emerging threats include:
1) Crowd-funding and Internet offers. The 2012 JOBS Act makes significant changes to the methods startup businesses and entrepreneurs may employ to bring their ventures to the investing market. Yet the relaxed rules governing registration of relatively small securities deals, public solicitation for private funds, and disclosure of information to investors over the Internet are not yet written. Furthermore, the JOBS Act provisions related to crowd-funding, a much-publicized method for startups seeking capital, are not yet available to legitimate businesses—and will not be until sometime in 2013.
2) Scam artists using self-directed IRAs to mask fraud. State securities regulators have investigated numerous cases where a self-directed IRA was used in an attempt to lend credibility to a bogus venture.
3) EB-5 investment-for-visa schemes. The EB-5 immigration category is a 20-year-old program that grants a U.S. visa to foreign nationals who invest a minimum of $500,000 into a new commercial enterprise. This job-creation effort has attracted investors from around the world; however, investors must beware of promoters who falsely claim that an investment in their venture is safer or guaranteed due to an influx of foreign cash. All investments with an EB-5 component are subject to traditional securities laws.
Also included in NASAA's list were the following persistent threats:
• Gold and precious metals
