The Texas State Securities Board (TSSB) came out with its annual list of the top investor threats and issued guidance for investors on steps they can take to protect themselves from fraud.
The top investor threats for 2022, according to the TSSB, are investments related to cryptocurrencies and digital assets. Stories of “crypto millionaires” attracted some investors to try their hand at investing in cryptocurrencies or crypto-related investments this year. That led to many cases of people who bet big and lost big.
The other three top threats are fraud offerings related to promissory notes; money scams offered through social media and internet investment offers; and financial schemes connected to Self-Directed Individual Retirement Accounts. The top 2022 threats were determined by a survey of securities regulators conducted by the North American Securities Administrators Association (NASAA).
TSSB said many of the threats facing investors today involve private offerings, as federal law exempts these securities from registration requirements, so they do not have the same investor protection requirements.
The TSSB said investors should be on alert for fraudulent websites and fake social media accounts by looking closely at content, analyzing dates of inception, and considering the quality of engagement. They should also be wary of fake client reviews featuring positive yet bogus testimonials purportedly drafted by satisfied customers. In addition, they warn investors that if it sounds too good to be true, it probably is.
“Bad actors often entice new investors by promising the payment of safe, lucrative, guaranteed returns over relatively short terms — sometimes measured in hours or days instead of months or years. These representations are often a red flag for fraud, as all investments carry some degree of risk, and the potential profits are typically correlated with the degree of risk. Learn more about the warning signs of investment fraud,” TSSB officials stated.