Showing posts with label scams. Show all posts
Showing posts with label scams. Show all posts

Wednesday 14 June 2017

Beware of money scams

Beware of money scams


KUCHING: Time and again, we hear stories of friends or family members losing their life savings to con men, money scams or investment schemes promising elaborate returns of money.
The recent spate involving JJ Poor to Rich (JJPTR) is the latest in a string of such scams.
The scheme was thrust into the limelight after it claimed last month that its funds were siphoned off by ‘hackers’, resulting in the alleged loss of over US$50 million or RM217 million.
Investors had gone knocking on JJPTR’s doors when their 20 per cent monthly returns were not banked into their accounts last month.
On April 27, the company promised to refund all investment funds collected from its 31,000 members.
Its founder, Johnson Lee said this was made possible through the injection of capital by a new pool of foreign investors. He said refunds would be given to those who had just sent in their initial investment capital as well.
However, following the arrest of Lee and two of his key associates, everything came to a full stop as to its business operations as of May 16 this month. They were nabbed to facilitate investigations under Section 420 of the Penal Code for cheating.
Lee and his associates were arrested by federal police from the Commercial Crimes Investigation Department in Kuala Lumpur and Klang, with police confirming that five of the JJPTR bank accounts were also frozen.
After weeks of posting regular updates to reassure investors – including videos from Lee and presentations of a new plan – it was discovered that two JJPTR FB pages have now been deactivated, while other pages have not been updated since.
This case brought to light the issue Malaysia faces: why are its citizens so gullible to fall for such scams?

Lack of financial awareness
Financial experts cite a lack of financial awareness as a reason to why consumers continue to become victims.
iMoney Group chief executive officer and co-founder Lee Ching Wei told BizHive Weekly that it all boils down to lack of financial literacy and also herd mentality.
“Just because a lot of your friends or family members are investing in something doesn’t mean it is a sound investment,” he said in an interview.
“People tend to take shortcut in their investment –- they want to see huge returns without doing their due diligence. Unfortunately, that’s not how investment works.
“You may get lucky once or twice, but you won’t be lucky every time.”
On this note, Bank Negara Malaysia Governor Datuk Muhammad Ibrahim earlier this year affirmed that the pursuit of financial knowledge is a key economic imperative encouraged by the central bank.
“In today’s world, the ability and knowledge to save, invest and borrow are essential life skills, be it for individuals or businesses. Various efforts have been undertaken to improve financial inclusion in Malaysia.
“While results are promising, our efforts in achieving financial inclusion need to be further intensified.”
Ibrahim said there remain gaps in access to financing for certain segments of society.
Examples of the common issues faced by consumers include:
1. Misrepresentation or mis-selling of financial products, including incidences of product pushing;
2. Disputes on interest rates, loan balances or settlement of insurance claims due to the lack of transparency and understanding in relation to the terms and conditions, or contract ‘fine print’;
3. The lack of capacity and poor discipline in financial management, resulting in high household indebtedness.
4. The measures taken to overcome financial difficulties
“From the aspect of consumer protection, the Bank continues to devote efforts towards strengthening trustworthy and user-friendly redress mechanisms through the Financial Ombudsman Scheme, in addition to strengthening policies on market conduct of financial institutions to ensure fair dealings to consumers,” the governor continued.
“The Bank will also continue to accelerate initiatives on financial literacy to ensure that the financial advisory services provided by financial institutions, Laman Informasi Nasihat dan Khidmat (LINK) and the Credit Counselling and Debt Management Agency (AKPK) will continue to enhance the overall skills and knowledge in finance.
“Various initiatives are also being undertaken at the school and university level, as well as targeted and high-impact financial education programmes catered towards teenagers and adults by AKPK.”

Protecting consumers from traps
On the other end of the spectrum, government bodies and associations are consistently active in ensuring consumers are aware and well-prepared to avoid such traps.
Bank Negara Malaysia is proactive in protecting consumers in this regard. They periodically update a list of unauthorised companies and websites which are neither authorised nor approved under the relevant laws and regulations administered by BNM.
The latest list consists of 302 companies and is consistently updated, with the latest as early as this week.
BNM also said the list of companies and websites is not exhaustive and only serves as a guide to members of the public based on information and queries received by BNM.
“The list will be updated regularly for public’s reference,” it said.
Only financial institutions – that is banks, insurance companies and takaful operators as well as money changers, remittance service providers and currency wholesalers licensed by BNM under the relevant laws and regulations administered by BNM – are allowed to provide financial services in Malaysia.
Bank Negara on a website dedicated to fraud alerts warn consumers of several ways scammers search for victims.
“Financial scams target people of all backgrounds, ages and income levels. Fake lotteries, advance-fee frauds, get-rich-quick schemes and internet investment schemes are some of the favoured means of separating the unwary from their hard-earned savings.
“New varieties of these scams appear all the time. Despite the on-going awareness programmes by the relevant authorities and media coverage on the plight of victims of financial fraud, many are still knowingly or unknowingly falling prey to the activities of fraudsters.
“One of the best ways to combat this financial fraud is through prevention.”
Bank Negara Malaysia will continue to work with the relevant authorities and regulatory agencies towards clamping down on the activities of financial fraudsters and promote consumer awareness on illegal financial schemes.

The credit card conundrum
One cannot talk about money scams without covering credit cards, being an easy target for scammers.
And with Malaysia moving forward with contactless card updates, digital transactions and cashless withdrawals, it is pertinent to stay vigilant of  scams of this manner.
According to iMoney’s chief Lee, there are about 9.3 million credit cards in circulation in Malaysia as of last year, with total transaction value amounting to a whopping RM118.5 billion.
Authorities are heightening security for credit and debit card usage in Malaysia by replacing the signature-based system with the personal identification number (PIN) verification.
Merchant payment terminals are also to be upgraded to accommodate the new security-enhanced system.
The migration to PIN from signature, which has started since last year, is part of a worldwide shift that has been implemented in Europe, Canada, Australia and New Zealand, with the Middle East also making the similar move.
Currently, all locally-issued credit cards have been replaced with those requiring personal identification numbers (PIN), according to BNM.
A total of 96.1 per cent of debit cards have been replaced while 99.8 per cent of point-of-sale terminals have been upgraded ahead of the July 1 deadline when signature authorisations will no longer be accepted.
“No extension will be granted,” BNM governor Datuk Muhammad Ibrahim told reporters while announcing Malaysia’s GDP for the first quarter of 2017 last week.
With just nearly 40 days left, Muhammad Ibrahim told the public to contact their issuing banks if they have not replaced their cards.

Contactless cards more secure than you think
As Malaysians move towards becoming a cashless society, consumers should opt for innovative payment methods which are convenient, speedy and secured, especially for purchases costing RM250 and under.
However, rumor mongers are active in spreading fear of using these cards, sharing horror stories of its misuse.
The Association of Banks in Malaysia (ABM) highlighted that contactless payment cards are “more secure than you think”, debunking several myths out there surrounding said cards.
“We wish to provide clarification regarding a video posting featuring “electronic pick-pocketing” of contactless payment cards which has caused come concerns over the security of such payment methods,” it said in a statement.
“ABM would like to highlight that the video, which we are given to understand, is several years old, was thought to have been made in the US where many contactless cards are/were still using magnetic stripes.
“While it is possible to build a scanner that can read certain information from payment cards using magnetic stripes, this technology will not work on cards which are using an Europay, MasterCard and Visa (EMV) chip.”
To note, EMV is a global specification for bank chip cards which prevents the cloning of cards. An EMV chip helps to reduce fraud as it is very difficult and costly to counterfeit.
When a transaction is performed by reading the EMV chip, a unique one-time cryptogram is produced which must then be validated for the transaction to be approved.
“The chip contains a secret unique cryptographic key, and unless that key can be extracted, it is not possible to copy or clone the chip,” ABM highlighted.
“More importantly, it should also be noted that it is not possible to build a regular magnetic stripe card from this captured data due to a magnetic stripe protection mechanism.”
Malaysia completed its migration to EMV chip cards by the end of 2004. Currently, all contactless payment cards issued in Malaysia have an EMV chip, therefore significantly reducing incidents of fraud, ABM stated.
“It is therefore not valid to cite a US example as proof that Malaysian cards are at risk,” it added.
To note, the US is still using the old signature-verified system for its credit cards.
“We would also note that Malaysia adopts a more secure payment verification method for internet transactions. To guarantee the security of each transaction, cardholders are required to enter a transaction authorization code (TAC) that is sent to their mobile phone or a card holder security device.
“In the event the card details have been fraudulently used for a transaction on an overseas website which has not implemented a secure payment verification method, the Malaysian cardholder will be protected by liability shift rules.
“These rules are imposed by the international card schemes which require overseas retailers to bear the liability of such fraudulent transactions.”

‘Maximum limit can be set’
The ABM has also clarified that card issuers may set a maximum amount for each contactless transaction as well as an appropriate cumulative limit for contactless transactions which do not entail any cardholder verification.
“Debit cardholders can also ask the card issuer to change the maximum amount for contactless transactions or switch off the contactless functionality for their debit cards,” it said in another statement. “Debit cardholders may check with their card issuers on how this can be done.
“We would like to remind all cardholders that they are responsible to safeguard their payment cards. It is the cardholder’s responsibility to notify their card issuer as soon as reasonably practicable in the event of loss/stolen or unauthorized use of their payment card.
“In the event a payment card is lost or stolen, the card issuer may excuse the cardholder from liability for unauthorised transactions made using the said card.
“This is provided the card issuer is satisfied that the cardholder has taken all reasonable precautions and diligence to prevent such loss or theft, and notified the card issuer promptly once the loss was discovered.”
Types of money-related scams
Illegal Foreign Exchange Trading Scheme
Illegal Foreign Exchange Trading Scheme refers to the buying or selling of foreign currency by an individual or company in Malaysia with any person who is not a licensed onshore bank or any person who has not obtained the approval of Bank Negara Malaysia under the Financial Services Act 2013 or Islamic Financial Services Act 2013.
This scheme involves the act of buying or borrowing foreign currencies from or selling or lending foreign currencies to a non-licensed onshore bank.
It can also be in the situation where the non-licensed onshore bank does an act that involves, is in association with, or is preparatory to, buying or borrowing foreign currencies from, or selling or lending foreign currencies to, any person outside Malaysia.

Unauthorised Withdrawals
Unauthorised Withdrawal involves the withdrawal or transfer of funds from an individual’s banking account without proper authorisation or consent by the individual.
Such incidents are normally the result of an individual knowingly, or unknowingly, divulging their personal information such as personal identification numbers (PIN) and password to fraudulent or third parties.
Based on investigations, many cases were due to customers knowingly or unknowingly divulging their personal information such as personal identification numbers (PIN) and passwords to third parties or fraudulent parties.
The transactions involved were genuine, using complainants’ account information and followed the required process. CCTV recordings had captured the complainants activating access to Internet banking at ATMs.
Most complainants were not Internet savvy and failed to understand that their own actions had led to the fraudulent withdrawal of funds from their accounts.

Forex Scams
Forex scams usually come in the form of ‘forex brokers’ soliciting investments with guaranteed high returns. Some investors were even promised up to 250 per cent returns.
According to Bank Negara’s definition, forex schemes is any individual or company that is buying and selling foreign currency without a license, or without approval from the central bank. If it’s not licensed or approved by BNM, it is best to stay away from such investment, be it forex trading or gold investment.

Ponzi Schemes
Ponzi schemes are similar to pyramid schemes.
This usually involves recruiting new members or investors.
Typically, each member is required to pay a membership fee, and the fees will be used to pay the earlier investors.
The cycle goes on until there isn’t enough money to go around anymore, and the scheme would start to crack.

Money games
Money games is run similarly to a pyramid scheme too. You are paid to recruit down lines, and you are typically promised that you will get back your investment capital within a few months and start seeing profit thereafter.
These are usually disguised as legitimate investment in forex, shares, commodities or even real estate.

Misuse of Bank Negara M’sia and senior officers’ and positions
The fraudulent use of Bank Negara Malaysia’s name, corporate logo as well as Senior Officers’ names and positions by fraudsters in illegal schemes or fraudulent activities in order to mislead members of the public.
The illegal schemes or fraudulent activities may be promoted through emails, letters, phone calls or other forms of communication.

Caller ID spoofing
Certain banks see their general line numbers being used by unauthorized parties to trick unsuspecting customers into providing their personal information with intention to cheat. The phone numbers used are exactly or very similar to the Bank’s contact number.
Based on complaints received, calls are mostly related to credit card transactions.
Examples include collection of payment overdue, verification of transaction done at a location where the customer may not reside or a transaction that is not performed, uncollected credit card, or so on.

Illegal Deposit Taking
Illegal Deposit Taking is an act of receiving, taking or accepting of deposits from members of the public that promises a repayment with interest or returns in money or money’s worth without a valid license under the Banking and Financial Institutions Act 1989 (BAFIA).
The operators of the ‘illegal deposit taking’ schemes have no valid licence to collect deposits and exploit the basic human tendency towards greed.
The operator promises very high returns on investment.

Unauthorised Use of Credit or Debit Card
Unauthorised Use of Credit or Debit Card is a transaction involving the charging of expenses/purchase of goods and services without the consent of the cardholder.
Such transactions may occur as a consequence of credit or debit cards that are lost, stolen, not received, issued on a fraudulent application, counterfeit or other fraudulent conditions as defined by the credit or debit card issuer.
Fraudsters are no longer just using SMS to elicit contact with unwary members of the public in an effort to extract personal banking information for unlawful purposes.

Illegal Internet Investment Scheme
Illegal Internet Investment Scheme is a variation of illegal deposit taking activities which employs the use of internet – such as through emails and websites – as a primary channel for interaction, communication and transaction of business engaged in fund management and investment advice without any licence.
Illegal investment schemes are those companies or individuals that are dealing in securities, trading in future contracts, and providing fund management services and investment advice and related to securities or futures without being licensed by the Securities Commission under the Capital Markets & Services Act 2007.

Protecting yourself as consumers
As scams grow increasingly sophisticated in an attempt to obtain your money or personal details, it remains crucial that consumers protect themselves by staying alert.
BNM  views illegal financial schemes very seriously and will not hesitate to enforce the law against the perpetrators and promoters of such schemes.
“The wrongdoers will face the full brunt of the law, including laws administered by Bank Negara Malaysia, the Penal Code, the Interest Schemes Act 2016, the Direct Sales and Anti-Pyramid Scheme Act 1993 as well as the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001,” it said.
Under the law, action can also be taken against investors who knowingly promote and participate in these illegal schemes.
To this end, BNM said a joint enforcement action on any financial fraud and scams will be pursued by an inter-agency initiative led by the Attorney General Chambers under the National Coordination Committee to Counter Money Laundering.
“BNM would like to caution members of the public not to participate in schemes that promise unrealistically high returns, interest rates or profits.
“Members of the public should ensure that they do not fall prey to these schemes by referring to Bank Negara Malaysia’s Financial Consumer Alert which lists companies that are neither authorised nor approved under the relevant laws and regulations administered by the Central Bank. It also provides information on the common features of illegal financial schemes.”
Financial institutions (FIs) and money services business providers have been directed by BNM to heighten their vigilance in detecting the accounts which are used by the perpetrators of financial scams and to further enhance their customer due diligence (CDD) policies and processes in identifying suspicious transactions and fund flows between bank accounts so as to prevent FIs from becoming conduits that facilitate such illegal schemes.
BNM and SC also reminded consumers to always verify the legitimacy of schemes which offer too-good-to-be-true returns or investment opportunities involving above-market rates of return and zero to low risk.
“They must obtain all relevant information before parting with their money. When in doubt, the public should check with Bank Negara Malaysia, the Securities Commission or other relevant authorities on the licensing status of the local and foreign company before depositing their money or making any investment decision.
“Members of the public are also advised to alert the authorities immediately if they come across any suspicious websites, e-mails or any information on the Internet relating to investment advice and services and deposit taking activities.”

‘Be wary when investing’
Apart from the usual advice of ‘know who you’re talking to’ and ‘avoid opening suspicious texts links and emails’, iMoney’s Lee extolled the virtue of being careful in investing your finances, following the numbers reports of credit card scam reports involving hundreds and thousands of ringgit.
“Always check and double check the sources that you are receiving your credit card information. Banks will never ask you for your credit card details over the phone, SMS or email,” he added. “If you do receive such a message or call, do not respond or reply and simply call the bank to verify.
“Only use your credit card on secure Internet connection and on secure and reputable websites or apps.”
Meanwhile, when looking out for a new investment option, Lee said key signs to look out for in terms of gauging credibility is to spot “guaranteed returns”.
“There is no guaranteed returns in investment,” he affirmed.”The second sign to look out for is the percentage of returns.
“If you are getting guaranteed returns at 15 per cent to 20 per cent — it is obviously not sustainable. If it’s too good to be true, it usually is.
“If you are unsure, always look up the company on Bank Negara or Securities Commission’s websites and see if the company is in the alert list or if it is licensed.
“Lastly, do your due diligence and try to understand how the investment works. How do they use your money to make more money? Do not invest in something you do not understand.”
To those who have fallen into such scams, Lee said it would be wise to “cut your losses and seek help from the authorities.”
“Blind trust or loyalty does not bode well in this situation,” he went on to add. “Never put all your eggs into one basket. If you are investing in something, legit or otherwise, you should never put all your money into one investment.
“If something that is out of the ordinary and not regulated by regulatory bodies, it is usually high risk. Hence, you should proceed with caution and not put too much money into the said investment.”

http://www.theborneopost.com/2017/05/28/beware-of-money-scams/

Wednesday 28 March 2012

Stock Market Scams

As an investor, you must be aware of the stock market scams. The following are two of the most common stock scams.

1. The Pump and Dump
The pump and dump is one of the easiest and most common ways of taking money away from unsuspecting investors. Although it is illegal, the use of the pump and dump has actually increased because the Internet has made it possible to reach millions more people.

Here’s how the pump and dump works:
First, company insiders try to convince outsiders to buy a stock, usually the stock of a small over-the-counter company (Penny stocks). Investors are led to believe that this is a “once-in-a-lifetime” opportunity to make a small fortune. The fraudsters will pump up interest in the stock by sending messages through Internet chat rooms, or posting overly optimistic press releases.

Before the Internet, pump and dumpers used to call people on the telephone (often called Boiler Rooms). The idea is to artificially pump up the price of a stock by spreading false news. The stock price rises because of increased buying and speculation, not because of anything positive happening in the company.

As the stock goes higher, those with inside knowledge are prepared for the “dump.” As more people buy shares of the stock, the insiders sell all their shares for a huge profit. Eventually, the truth comes out, and the stock price falls as more people sell. Guess who is left holding the shares of the now nearly worthless stock? You guessed it – the unsuspecting investors who bought into the hype. They probably thought the price could go higher, so they never sold their shares.




The pump and dump is one of the oldest and most effective scams. Usually, pump and dumps are used on small stocks selling below $1.00 a share because it is easier for pump-and-dumpers to manipulate the stock price with smaller stocks.



2. Insider Trading
There are actually two types of insider trading: legal and illegal.

Legal insider trading is that done by company employees (insiders) who file proper paperwork with the SEC before buying and selling shares in their company. These documents are available for viewing on the SEC Web site.

On the other hand, illegal insider trading occurs when company employees buy and sell stocks based on information that is not known to the public. For example, it’s illegal for the managers of XYZ Company to buy additional shares of stock in the company if they know that a revolutionary new product is about to be released. It’s even illegal for you to buy shares of stock in that situation if company insiders (perhaps your neighbor) tell you about it.

Do you think insider trading is common?
It certainly is. It occurs a lot more often than many people think. Every once in a while the SEC catches a celebrity just to make a point that it’s watching. Nevertheless, it’s my estimate that thousands of insiders are using information gleaned from the companies they work for to make profitable transactions. It’s an open secret that those in the know are trading stocks on inside information.

Friday 9 March 2012

Beware of hard-sell tactics, warns SSM

Beware of hard-sell tactics, warns SSM - Star Online

1. Malaysians lured into investing in illegal interest schemes have been fleeced of at leastRM620mil over the past three years.

2. The Companies Commission of Malaysia (SSM), concerned over the rise of such scams, published an advertorial in the wake of recent complaints over a Canadian land-banking scheme to remind investors of the risks involved.

3. An interest scheme is a form of investment in a medium other than shares and debentures (unsecured loans) involving the pooling of public funds to finance the business activities of a company.

4. In return, participants are offered a specific return on their investment in the form of money, benefits or facilities. A common modus operandi involves convincing people to make a one-off investment in a business endeavour that is managed entirely by the operator.

5. Many illegal interest scheme operators often used aggressive marketing strategies, such as treating their potential “marks” to dinner or high tea at a posh hotel and preventing them from leaving before they commit to an investment.

6. Sometimes, support letters by dignitaries or celebrities are used to lend credence to the operator. In many cases, we have noticed that the dignitaries or celebrities were not fully apprised of the details of the scheme, or were unaware that they were being associated with the scheme.

7. Another is to convince investors to build their own business (often with a buyback guarantee) on the condition that they purchase their training and equipment from the operator. The operators are creative. Investors in interest schemes should be wary if an operator appears too eager to close a deal.

8. A few years ago, agriculture and its products (like lemon grass, leeches, earthworms, seaweed) were very popular.

9. Recent products include livestock (swiflets and arowana fish), plantations (palm oil, jatropha and agarwood), leisure and property development (holiday homes and hotels), equipment (ice-cream, ICT and water-vending machines) and gold. To date, SSM has registered 173 schemes worth about RM1.29bil.

10. A list of registered interest schemes is available on the SSM website (http://www.ssm.com.my/en/company/is-registered-scheme-public) and the public can call 03-2299-5500 to check or verify offers from interest scheme operators.



http://www.investlah.com/forum/index.php/topic,35078.msg771684.html#msg771684

Saturday 14 January 2012

Recent Stock Scams


What are stock scams?
Over the past few years there have been many stock scams taking place that cheated investors out of millions of dollars. Some companies have put millions of dollars on the books as revenue that was really fictitious. Other companies like Enron used misleading accounting tactics to trick their investors into thinking that their company was worth much more than it really was. As a result, it turned a stock worth more than $100 per share to one worth mere pennies. These large-scale scams fooled even the most seasoned investors and policing agencies, so there's not too much you can do to personally investigate the companies. However, there are other smaller-scale scams that you can catch and be way of.

Penny stocks
Generally, a penny stock is a stock that is trading for less than $1 per share and is trading over the counter, as opposed to one of the major exchanges like the NASDAQ. The price does not matter as much as the facts that the companies are generally very small and highly volatile. Within a space of a few hours, a stock costing $1 can easily turn in a one cent stock or a ten dollar one. Because the volume of trades for the stocks are so low, even a few people selling all their shares or buying a large number shares can dramatically affect the stock price. The following picture depicts a penny stock certificate, and a description of a common scam is below it.

Picture from Wikipedia, May 2006

Pump and Dump
In a pump and dump scam, somebody will release either great news for the company or terrible news. As investors rush to buy or sell stock, the person is strategically placed to reap great financial benefit. For example, a person who owns 10,000 shares of a stock worth $1 could mass email a fake news story about the company's earnings and get the price to $10, at which point he or she could sell. The best way to avoid this scam is to avoid penny stocks altogether. Although you could possibly make money, most of the time investors lose out.

Thursday 1 April 2010

Amidst All Hype: Stock Market Scam And How To Avoid Them


Amidst All Hype: Stock Market Scam And How To Avoid Them

By Divina Bryt | March 31, 2010

With all of the prices going high nowadays, people would right away grab the chance on anything which will make them earn cash. And this is basically where fraudulent folks take advantage of.
Today, there are many cons as there are stars in the sky. They had been so rampant that folk became so mindful of its worrying condition. But still, regardless of if they know that there is a sure to be a swindle out there, they could not yet distinguish what’s a scam and how can they avoid it.
In the industry, one of the proliferating stings is the stock market tricks. A lot of folk are getting lured to join these just because their offer seems so hard to resist.
Why? Because who wouldn’t resist a “get rich quick” strategy? These are just petty things but are actually bigger problems than what you thought it is.
For people to know what stock market scams are and how to avoid them, here’s a list of the common stock market scam lurking mostly in the Internet today:
1. The “Pump and Dump” stock market scam
This sort of stock market con is generally spread in the internet. Here, folk typically get to see messages posted in the web suggesting them to get a stock immediately. This type of con also urges those who have stocks already to sell their stocks right before the worth depreciates.
These deceptive scammers claim that they have reliable sources about a threatening development. They even assert that they utilize a foolproof combination of the stock market and the trade and industry data so as to get some stocks.
The base line is that this kind of stock market scam is negative especially to people who are starting little. Actually, people behind this sting would want to manipulate the exchange through small time companies because home businesses are easier for them to manipulate.
2. Pyramid trick
Just like its motherboard, this pyramid trick in the Net makes an attempt to hoard money from the clients by letting them invest their small amount of money and grow it very big provided that they recruit more people into the company.
These two are the most common stock market scams lurking in the Internet today, and the only way to avoid them is information. It’s a must that people should be aware of them, know their styles, and how they recruit people. If in case, they cannot determine if it is a scam or not, they should verify the claims from the right people. That’s the simplest thing to do.


Saturday 7 February 2009

Madoff Topples Zsa Zsa School of Investing

Madoff Topples Zsa Zsa School of Investing
By Selena Maranjian
February 5, 2009 Comments (1)


A few years ago, I spotlighted Zsa Zsa Gabor as a surprising source of investing insights. Now I'm having second thoughts.

Gabor, who's now almost 92, is in the news again. Why? Well, there's a summary of the situation on a website in her native Hungary, and although it reads like Greek to me, one word in particular stands out ... Madoff. Yes, Zsa Zsa's one of the many customers apparently duped by Bernie Madoff.

Avoiding scams
The glamorous Ms. Gabor has my sympathy, as do all of Madoff's victims. They were swindled, plain and simple. Still, some of them might have suffered less if they'd followed some basic investing rules. For example:

Diversify!
I'm not suggesting you should own hundreds of stocks. Heck, even eight might be enough, as long as they're distributed among different industries and maybe even a few different countries. It appears that many Madoff victims left the lion's share of their wealth in his hands. That's always risky, no matter how much you trust someone.

Tend to your asset allocation
If you have decades to retirement, you might want to be 100% in stocks, as they tend to grow fastest over the long haul. If you have only a few years, you might want to keep some money in bonds. Considering that Gabor is in her 90s, she might do well to keep a chunk of her money in conservative income-producing dividend payers. Here are some contenders -- companies with dividend yields above 3%:

Company
Recent dividend yield

Bristol-Myers Squibb (NYSE: BMY)
5.5%

ArcelorMittal (NYSE: MT)
5.1%

Consolidated Edison (NYSE: ED)
5.7%

Kraft Foods (NYSE: KFT)
4.4%

Titanium Metals (NYSE: TIE)
3.9%

Sysco (NYSE: SYY)
4.0%

Spectra Energy (NYSE: SE)
6.8%


Source: Motley Fool CAPS.


A free, no-obligation trial of our Motley Fool Income Investor service will give you dozens of researched recommendations, many yielding 8% or more.

Be skeptical
Finally, Gabor and others should have been wary of Madoff's relatively consistent returns. Know that the stock market has always gone up over the long haul -- but as we were reminded sharply in 2008, it can swing wildly from year to year.

Don't wait until you're 92 to brush up on your investing basics. They're your best defense against swindles, scams, and other Wall Street dangers.

http://www.fool.com/investing/dividends-income/2009/02/05/how-madoff-swindled-one-of-my-favorite-investors.aspx