- Skip Navigation

Note: This message is displayed if (1) your browser is not standards-compliant or (2) you have you disabled CSS. Read our Policies for more information.


Agency Links Links

Secretary of State

Securities Division > News Archive  > 2005 Press Releases > For Immediate Release: April 11, 2005 Secretary of State Todd Rokita Names Top Ten Threats to Investors

Contact: AJ Freeney-Ruiz

Indianapolis, IN - As part of Investor Education Month, Indiana Secretary of State Todd Rokita today identified the most common ploys being used to cheat Hoosier investors out of hundreds of millions of dollars.

"Investors should keep their guard up anytime anyone offers an investment opportunity. It pays to remember that if an investment sounds too good to be true, it usually is," Rokita said.

The following ranking of the top ten threats to Indiana investors for 2005 is based on the order of prevalence and seriousness as identified by an annual survey of members of the North American Securities Administrators Association (NASAA).

1. Ponzi Schemes: The premise is simple: pay early investors with money raised from later investors. The only people who make money are the promoters who set the Ponzi in motion.

2. Unlicensed Individuals Selling Securities: Anyone selling securities without a valid securities license should be a red alert for investors. Remember: No license, no sale. You can check whether a person is registered to sell the investment at the Secretary of State's office at or 1-800-223-8791.

3. Unregistered Investment Products: Con artists bypass stringent state registration requirements to pitch viatical settlements, pay telephone and ATM leasing contracts, and other investment contracts with the promise of "limited or no risk" and high returns. You can check whether an investment is registered at the Secretary of State's office at or 1-800-223-8791.

4. Promissory Notes: Empty promises can leave these notes worth less than the paper on which they are printed.

5. Senior Investment Fraud: Because of their access to a lifetime of savings, seniors continue to face investment fraud by con artists peddling unsecured promissory notes, viatical settlements and other investments that are either fraudulent or unsuitable for them based on their particular financial needs.

6. High-Yield Investment Schemes: Con artists lure investors with promises of triple-digit returns through "risk-free guaranteed high-yield instruments" or something equally deceptive.

7. Internet Fraud: Stock promoters are using online "boiler rooms," instant messaging, and fake websites to lure investors into "pump-and-dump" stock schemes.

8. Affinity Fraud: Con artists are increasingly targeting religious, ethnic, cultural, and professional groups; the con artists gains the trust of members of the group.

9. Variable Annuity Sales Practices: Senior investors should beware of the high surrender fees and steep sales commissions agents often earn when they move investors into variable annuities.

10. Oil and Gas Scams: With oil topping $50 a barrel and continued Middle East instability, regulators warn that con artists may renew schemes promising quick profits in oil and gas ventures.

Three scams also were cited for "dishonorable mention," including penny stocks, private placements, and investment seminars.

Before making any investment, Rokita urged investors to ask the following questions: Are the seller and the investment properly licensed and registered? Has the seller given you written information fully explaining the investment? Are claims made for the investment realistic? Does the investment meet your personal investment goals?

Rokita also urged investors to contact the Secretary of State's office with any questions about an investment product, broker or adviser before making an investment. "One phone call can save a lot of money and heartache," he said.

Rokita reminds Hoosiers to check out any opportunity before investing. All corporations should be registered with the Secretary of State's office, as should investments and their sellers. Information can be verified by visiting or by calling 1-800-223-8791.

For more information about NASAA's top ten threats, visit the NASAA Fraud Center at NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, Canada, and Mexico.