- Encouraged to open a new credit card or to increase the credit limit on an existing credit card account;
- Asked to split your payment between multiple credit cards; or
- Told you will make enough money in the next 30 days to pay your credit card bill.
Any suggestion from a so-called broker that an investor use a wire transfer to make an investment should raise just as many red flags, the SEC said.
Offshore addresses are also a huge gamble for investors.“If you wire money outside of the U.S. for an investment that turns out to be a scam, you likely will never see your money again,” the agency warned.
According to the SEC, anytime an investor is asked to pay for an investment by wire transfer – whether foreign or domestic, he or she should be suspicious if:
- The wire is being sent to a person;
- The address is suspicious (e.g., it is a mailbox or virtual address); or
- You are told to note that the payment is for a purpose unrelated to the investment (e.g., medical expenses or a loan to a family member).
In another recent enforcement case (SEC v. Senderov and Babazara), the SEC took action against a fraudulent multi-million dollar scheme that used boiler-room-like call centers to solicit investors to pay for the investments by bank wire to third-party companies or credit cards.
“Fraudsters may ask you to note that your payment is for something other than an investment in order to keep the bank from detecting their scam,” the regulator warned.
Investors can save themselves from working with unregistered firms and advisors, by checking out bona fides at https://www.adviserinfo.sec.gov/IAPD/Default.aspx and brokercheck.com.
“We urge investors to work only with a licensed or registered investment professional or firm and not attempt to use a credit card to fund investments,” the SEC said.