you’ve come upon a bit of money — whether it be an
inheritance, a union contract signing bonus or a
lump-sum retirement payout — you need to cast a
cautious eye on the so-called next big thing for
pitched as a hot investment easily could turn into
another way to watch your money go up in smoke.
North American Securities Administrators Association is
warning that investors should be wary of three heavily
pitched products — binary options, marijuana-related
investments and chances to make money on digital
currency. The issues are trendy and building buzz in
online investment communities and elsewhere. Others
express concern about crowdfunding hype, too.
are four areas that are ripe for scams and shenanigans:
you just spot a Facebook posting offering a way to make
a quick 50 percent on your money?
can sound sort of simple. You take a yes-or-no bet on
whether a stock or other investment will go up or down
in a set time. Maybe, you’d use a binary option to bet
that a specific stock will be trading above $9.75 a
share at 3 p.m. on a given day.
a bet about whether a particular security will rise or
fall in price," said Joseph Rotunda, director of
enforcement for the Texas Securities Board and vice
chair of enforcement for the North American Securities
big trouble spot: You’re either right or wrong, no
either going to win everything or lose everything,"
options are sometimes known as Fixed Return Options,
digital options and even "all-or-none
options." Unlike other types of options, the binary
option does not allow the investor the right to purchase
or sell the underlying asset. It’s an
"all-or-nothing" payout structure, according
to a warning from the U.S. Commodity Futures Trading
in 2014, Texas state regulators took action against a
company that used the name the "Top Money Earners
Group," which was a marketing network pitching a
binary trading options program. The program was
available on websites and via Craigslist under the names
Top Money Earners Group and the Joint Venture Group.
Investors paid $20,000 upfront to become members and
then had to deposit at least $5,000 to establish a
false promise: Investors were told that they were
guaranteed that their initial opening account deposit
would double within 90 days.
fact, the investment involved a high degree of risk. The
Texas State Securities Board issued an emergency
cease-and-desist order and, among other things,
concluded that misleading statements were being made
that were likely to deceive the public.
binary options market operates mostly on Internet-based
trading platforms, according to warnings by the
Securities and Exchange Commission.
trick: Investors might kid themselves into thinking that
they can do their research on these stocks, much like a
fantasy football pick, and somehow outsmart the other
gamers. Not so.
so called easy path to riches is riddled with potholes,
according to regulators including the Financial Industry
Regulatory Authority. They said that some binary option
scams even demand another fee when someone asks to get
their investment returned.
you just spot a headline on bitcoin or another digital
maybe a trendy currency for the digital age. But
regulators warn that scammers can cook up trouble.
Stoltmann, a Chicago-based attorney who typically
represents investors who lost money, said bitcoin-related
pitches represent another so-called deal that
individuals should avoid at all costs.
we see a type of investment in the headlines, like
medical marijuana or bitcoin, fraudsters come out of the
woodwork to pitch ‘investments’ related to these
products," Stoltmann said.
call these high risk investments doesn’t even do it
justice. No reputable financial adviser would recommend
these sorts of products," Stoltmann said.
other risks, regulators note that the value of virtual
currencies can rise and fall quickly and the investor
can see substantial losses.
medical marijuana is the ‘next big thing’ when it
comes to investment options?
warn this idea is a dud, too.
have a new industry and it’s an industry that’s
hungry for capital," said Texas regulator Rotunda.
Securities and Exchange Commission has suspended trading
in various penny stocks or microcap stocks with
incomplete or misleading disclosures and claims to be
involved in the medical marijuana industry.
Securities and Exchange Commission has also warned about
the lack of clear reporting when it comes to highly
touted stocks in small companies that play up a medical
said he has been contacted by roughly 10 victims of
medical marijuana scams in the past 12 months but he has
had to turn them all down because of concerns that it
would be impossible to collect any money from the bad
to take a huge bet investing in a local outfit?
is the next new thing when it comes to investing,
particularly after the Securities and Exchange
Commission adopted some new rules.
Mercer Bullard, an advocate for investors and professor
of law at the University of Mississippi, warned that
some startups are bound to fail.
scammers, no doubt, will try to take advantage of the
crowdfunding buzz, too.
general, Bullard said, investing in a startup should be
viewed as "fun" money for everyday investors,
not a substantial part of any investment portfolio.
is the last thing on your list of potential
investments," Bullard said.