Florida Office of Financial Regulation Warns About Investment Schemes

This week, the Office of Financial Regulation (OFR) reminded investors to be on the lookout for investment schemes pitched through the internet and social media, particularly those involving precious metals, cryptocurrencies, promissory notes and foreign exchange markets.

Schemes related to these products were identified as the top threats facing investors this year in a survey by the North American Securities Administrators Association (NASAA), of which OFR is a member. The survey includes responses of enforcement officials with state and provincial securities regulators throughout the United States, Canada and Mexico.

The survey found fraudulent internet- or social media-based frauds as the top threat to investors. Ranked second are cryptocurrency-related and precious metals-based investments, especially those purchased through self-directed individual retirement accounts (IRAs), which lack the services and protection of traditional IRAs and can be fertile soil for scammers. Foreign exchange-related schemes rounded out the top three threats. In particular, enforcement officials expect to see a resurgence of high-yield foreign exchange and cryptocurrency-related schemes targeting investors this year disguised as membership or investment programs.

The NASAA survey also indicated that 82 percent of state and provincial securities regulators anticipate that bad actors will continue to attempt to leverage investor fear and anxiety related to changes in financial markets and the economy due to COVID-19 to illegally sell securities this year.

“During the pandemic, fraudsters and scam artists are working overtime to find their next victim, and just as we see following hurricanes and disasters, they will use COVID-19 as a way to prey on people during their most vulnerable times. We must continue to fight fraud in Florida and provide the information and resources for consumers to safeguard themselves from financial schemes and spot fraud before it happens,” said state CFO Jimmy Patronis.

“Bad actors always try to leverage vulnerabilities wherever they can be found. We expect to see an uptick in complaints from investors lured into programs offering the promise of high returns as a way to supplement income lost as a result of the pandemic,” said OFR Commissioner Russell Weigel.

Investment offers that sound “too good to be true” often share similar characteristics. The most common telltale sign of an investment scam is an offer of guaranteed high returns with no risk. All investments carry the risk that some, or all, of the invested funds could be lost.

“Anyone who says their investment offer has no risk is not being honest,” Weigel said. “Investing is a long-term proposition. Get-rich schemes are built on empty promises and empty pockets.”

Weigel recommends that investors should always ask if the salesperson and the investment itself are properly licensed or registered. This information can be confirmed by state and provincial securities regulators. “Working with a properly licensed investment professional affords investors certain legal protections,” he said.

Before making any financial decisions, ask questions, do your homework and contact OFR at www.flofr.com for more information.

The Florida Office of Financial Regulation provides regulatory oversight for Florida’s financial services providers. Our mission is to protect Florida’s financial services consumers, promote a safe and sound financial marketplace, and contribute to the growth of Florida’s economy through fair, innovative, and excellent regulation of the financial services industry.



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