The Securities and Exchange Commission has issued an investor alert that lists the warning signs that an unregistered offering may be bogus.  

While the JOBS Act has opened the door for investors to reap the benefits of unregistered start-ups and other small companies that don’t have to go to the usual expense of disclosures and other SEC requirements, the agency warned these lightly regulated offerings can expose advisors and their clients to fraudsters.

The agency cited 10 red flags that should make investors wary of private placements and similar investments:

1.    Promises of high returns with little or no risk.
2.    Sales people not registered with the SEC offering the investments.
3.    Aggressive sales tactics.
4.    No sales documents or ones that don’t look professional, including typographical, spelling or other errors.
5.    Offerings that fail to ask investors about their net worth or income.
6.    Investment deals that only involve sales people, rather than brokerage firms, accountants, law firms, or other third parties.
7.    Investments that do not list a physical mailing address other than a post office box.
8.    Investments that involve companies not in good standing with regulators, including the respective secretary of state’s office.
9.    Unsolicited investment offers.
10. Suspicious or unverifiable biographies of managers or promoters.