No one thinks they will be taken in by a scam—they always sound “too good to be true.” But billions of dollars are lost every year in Utah alone, with scam artists often taking advantage of personal relationships, trust, and fear as a way to get people to make decisions they would never otherwise make without intense sales pressure.
AARP Utah has teamed up with the Utah Securities Division to give presentations on financial fraud across the state, but few people know of the information they can seek directly from the Division. Further, the Division handles complaints and uses consumer information as a means to find and prosecute fraud in the state.
One problem with securities fraud is that people are often too intimidated to ask questions, not wanting to appear uninformed or offend the salesperson. This is a huge mistake. Any reputable broker will be happy to answer your questions, and wants you to feel confident that your investment is suitable.
Here are questions the Division believes will help you make informed decisions before investing:
- Have you researched the company and its management? Are there independent sources of information?
- Does the company, its management, or salespersons have all their necessary licenses?
- Whose name is on all the documents?
- What relevant experience does the company and its managers have?
- Have you been offered some disclosure document?
- Do I understand the business plan and how it will make money?
- Have you been offered audited financials from the company?
- Does the investment’s history of returns seem to be too good to be true?
- What is the track record of paying investors interest due or returns of principal?
- Do you understand all the risks associated with the investment?
- Can you afford the risks associated with the investment?
- What type of security is being offered?
- Is that security properly registered with the Utah Division of Securities or federal government?
- Do you understand all the costs (e.g. fees, charges, commissions, penalties) associated with the offering?
- Do you understand everyone who will receive compensation, in any form, from your investment and for what services?
- Do you understand the terms, if any, by which your costs can increase?
- Are your investment dollars coming from disposable savings, or some other source such as home equity, retirement accounts, or credit?
- Why does the company need my money?
- How does this affect your taxes?
- Is your membership or relationship to a specific group being used, directly or indirectly, to build trust or pressure you into the investment?
Find more information about securities or check out an investment or broker in Utah.
[Photo of Utah Securities Division Enforcement Director Tom Brady and friend.]