Securities fraud refers to various deceptive actions aimed at manipulating investors and financial markets for personal benefit. These schemes usually exploit confidence, lack of financial experience, or greed, and bring significant economic losses to the victims. The following describes the main types of securities fraud.

1. Ponge scheme

The ponji scheme is an informal investment strategy to pay back to the initial investor by paying funds from new investors, not just business interests or investment interests. This mechanism creates an illusion like a successful business, but the scheme inevitably collapses if a new investment is stopped or the participant demands too much money.

Features of Ponge scheme:

High return guarantee: at a minimum risk promises consistently over average returns.

Lack of transparency: investment strategy details are ambiguous or overly complex.

Unsustainable structure: you need to always recruit new investors to return funds.

Noteworthy examples:

Bernard Madoff: a scheme that defended more than $650 billion from investors.

Tom Peters (Peters group global): a $37 billion scale Ponge scheme targeting institutional investors.

How to protect yourself:

SEC（ Securities and Exchange Commission FINRA（ Confirm investment opportunities to regulatory authorities such as financial regulatory institutions.

Especially in an unstable market, the "guaranteed" return becomes skeptical.

Penny stock Scams

Penny stocks are traded at low price stocks for small businesses and unnamed firms, usually trading in less than five dollars per share in OTC markets. Because it is low cost and there is no regulation, it is easy to become a target of the scam.

General care of penny stock Scams:

False claims:

Fraud attempts to spread the misleading information and manufactured information about the future of the company and raise stock prices.

High pressure sales

Investors are forced to buy large quantities of stock.

Lack of transparency

Penny stocks have a limited number of financial information disclosure, and demand is difficult.

Risk:

Because liquidity is low, the sale of the stock may become difficult.

Extreme volatility may lead to a massive sudden loss.

Pump and dump schemes

The pump and dump scheme is to raise the price of stocks (usually penny stocks) by exaggerated or false claims. As the price rises, the swindler will sell shares to gain profits, plunge stock prices, and make other investors shares worthless.

Mechanism:

Pump: fraud propagates hype about stocks through social media, email campaigns, or forums.

Dump: if enough number of investors buy stocks and the price soars, the swindler will sell shares held and plunge stock prices.

Famous examples:

The Stratton orkmont activity in Wolfe of Wall Street shows many pumpkin and dump schemes.

Warning sign:

Unidirectional stock recommendation.

Groundless abnormal sudden stock price rise.

Stock broker fraud

Stock broker fraud occurs when brokers deceive customers using an unethical or illegal method. These acts range from unauthorized transactions to theft of customer funds.

Broker fraud type:

Charming

Buying and selling securities excessively in order to obtain a fee without becoming a customer's interest.

License free

Conduct transactions without customer consent.

False indication:

Providing false or misleading information about investment.

How to protect yourself:

Monitor your accounts regularly and have doubts about suspicious transactions.

Broker for use FINRA（ Make sure that you are authorized by the financial instruments and exchange organization or similar institutions.

5. Boiler room Scams

Boiler room fraud refers to telemarketers and brokers to force investors to use strong selling techniques to buy valuable or speculative shares. This is often done in a high-pressure atmosphere (this is called "boiler room").

Mechanism:

The salesperson will make sure the investor is confident of the profit by using the previously prepared sales phrase.

The target is often an experienced investor who is quick acting.

Caution:

Strong selling method.

I have a chance once in my life.

6. Signal room Scams

Signal room fraud refers to a group or chat room that promises share information and transaction signals that lead to profits in exchange for membership fees and membership fees. Although these groups look seemingly legitimate groups, they often use deceptive techniques to attract participants.

Mechanism of signal room fraud:

Fraud offers a so-called "insider" transaction signal to members and charges fees.

The signals provided are often based on arbitrary, old, or manipulated data.

Risk:

Participants may suffer losses by following false advice.

Fraudulent agents may use these groups to advertise certain brands and carry out dump and dump fraud.

Self defense

Avoid joining an unaccomplished trading group.

Verify the reliability of the signal provider through independent investigations.

Conclusion:

There are various forms of securities fraud, both of which exploit investor confidence and economic fragility. For self-defense, always consult with a reliable financial specialist in order to pay attention to potential fraud and pay attention to potential fraud.