Don’t Get Caught In These Risky Investor Traps

You’re anxious to rebuild your nest egg but want to make sure you invest wisely. Here are some of the top products and practices you should avoid, according to the North American Securities Administrators Association:

Foreign Exchange Trading Schemes. Beware of salesmen who claim to have algorithms or propriety software programs that allow them to beat the market. State regulators have found situations where there are no trades; the money is simply stolen.

“Green” schemes. New energy-efficient technologies are popular, but be wary of those exploiting headlines related to the Gulf oil spill clean-up and “clean” innovations, such as wind energies or carbon credits.

Oil & Gas schemes. These investments tend to be unsuitable for smaller investors who can’t afford the risk. While ventures can be legitimate, some promoters structure their “general partnerships” to avoid securities regulation.

Affinity fraud. Scam artists like to prey on groups, such as church members and professional groups. Seek further information from an unbiased, independent source.

Undisclosed conflicts of interest. Demand that anyone giving advice or recommendations disclose how they are compensated.

Private or special deals. Although properly used by many legitimate issuers, private offerings have become an attractive option for con artists who steal money by promoting special deals.

“Off the Books” deals. Be cautious if your broker offers an investment on the side instead of one sold through his or her employer.

Unsolicited online pitches. Fraudulent investment scammers are now using social media (Facebook, Twitter, Craigslist, YouTube) to solicit unsuspecting investors. Approach any unsolicited investment opportunity with suspicion.

How do you avoid getting taken? Do your homework, be skeptical and only do business with licensed brokers and advisers. Check out any adviser before you invest at a site such as www.adviserinfo.sec.gov. Report any suspicion of fraud to your state or provincial securities regulator.