Close Menu

NASAA Cautions Investors Against Blindly Chasing Higher Returns

Following the recent announcement by the Federal Reserve that interest rates are expected to remain low until at least 2014, the North American Securities Administrators Association (“NASAA”) issued a warning to investors to be cautious about investments offering higher returns. The NASAA cautioned that investors should not abandon their slower growing, safe investments in favor of higher yielding alternative investments without fully understanding the risks and terms of the alternative product.

State securities regulators are concerned that individuals who depend on fixed income investments, especially seniors, may be more easily persuaded by unscrupulous salespeople to invest in inappropriate, risky investments or fraudulent schemes. The NASAA’s current list of “Top Investor Traps” includes private placement offerings, promissory notes, securitized life settlement contracts, and investments in energy, distressed real estate and precious metals, which may be frauds in disguise.

Investors should remember that risk and reward are tied together. Investments with higher returns carry a higher degree of risk to investors; the lower the return, the lower the risk.

Before making any investment, investors should do their homework, especially for investments that seem to offer unusually high returns compared to other investment options. Investors can verify the legitimacy of many investments through the SEC’s online database (https://investor.gov/). Investors can also review the employment and complaint history of a stockbroker through the Financial Industry Regulatory Authority (FINRA)’s BrokerCheck database
(www.finra.org/Investors/ToolsCalculators/BrokerCheck)
and investment advisors at the SEC’s Investment Adviser Public Disclosure database (www.adviserinfo.sec.gov).

Investors nationwide who have incurred investment losses, and who may have a FINRA arbitration claim, may contact the Florida securities lawyers at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or by e-mail to kelly@mccaberabin.com.

Facebook Twitter LinkedIn Google Plus