Saturday, January 1, 2011
Officials warn of financial pitfalls: Department of Commerce releases list of investment warnings
State officials are hoping Utahns will consider adding financial-savvy to their New Year's resolutions lists.
The Department of Commerce on Thursday released a list of the top 10 money warnings to watch out for during 2011.
"Securities fraud continues to make headlines so we are asking citizens to add financial resolutions to their New Year's list," said Francine A. Giani, executive director of the department.
Keith Woodwell, director of the division of securities, says during fiscal year 2010, his office received more than $5.3 million dollars in total fines for fraud cases - twice what was assessed in 2009.
"As consumers look to re-energize their retirement investments in the new year," he said, "we urge investors to protect their nest egg by checking out a promoter's background and any investment offer with our division."
Following are descriptions of the top three financial warnings. Department spokeswoman Jennifer Bolton says the list includes legitimate investment methods which require extra due diligence. She stressed that not all investment tools are scams.
First on the division's list is affinity fraud. Common affinity groups include religion, profession, education, age and any other common likeness or shared characteristics that persuade investors to trust members of the group, according to the division.
"Investors should obtain and review a disclosure document that explains the investment opportunity, the background of the management, the amount of money to be raised, the intended use of the money raised, and all the risks associated with making an investment," the warning reads.
The second caution deals with inverse and leveraged exchange-traded funds, or ETFs. State officials say these products are growing in popularity.
"While such products may be useful in some sophisticated, short-term trading strategies," they caution, "they are highly complex financial instruments that are typically designed to achieve their stated objectives on a daily basis."
FOREX trading programs, third on the list, deal with foreign currency exchange markets.
"Due to the complexity of factors affecting the exchange rate of one currency to another, speculative FOREX trading bears a high level of risk," the state warns. "In several cases, promoters who have promised guaranteed returns in their proprietary FOREX trading programs have simply stolen the money and spent it on supporting their own lifestyles."
http://news.hjnews.com/news/article_3a3be16c-1563-11e0-b0e8-001cc4c03286.html
