He said scam artists have ripped off tens of thousands of Americans of all ages, though they primarily target retirees. In the 87 cases the CFTC has filed in federal court in the last five years alleging foreign-currency fraud, investors have lost a total of $380 million. Dunn estimates that investors lost $1 billion in that time to foreign-currency fraud.
"We've got stories of people suffering from dementia and get these cold calls," said Dunn said. "There are also some very, very bright people [who get scammed]."
With foreign-currency trading, investors buy currencies on the open market. They hope the currency they're buying will rise in value more than the currency they're using to buy it.
The CFTC is working with state and local authorities to step up investigations and prosecutions in fraud cases. It is also trying to educate the public through an informational brochure, partnerships with consumer groups and town hall-style meetings hosted with the National Futures Association.
The message, in large part, is that investors should be wary of unlicensed brokers offering deals that sound too good to be true. Investors should avoid high-pressure sales, confusing investments and brokers who encourage them to mortgage their home or cash out their retirement savings.
Asset
An asset is anything of value owned by a person or company. Assets can be converted into cash depending on demand conditions. In accounting, the term “asset” in a balance sheet includes cash, inventories, property rights and goodwill. Assets can be used to generate cash flows.
Types of Assets: Tangible
The various types of assets are:
Tangible assets: These assets have a physical existence, such as equipment, building and real estate. It has two sub-classes:
Current assets: These are cash as well as assets that can be converted into cash, or consumed within a year or within an operating cycle.
Fixed assets: These assets, such as tools, machinery, land, buildings and furniture, are purchased with the sole aim of generating profits. Fixed assets, also called PPE (property, plant and equipment), are purchased for long term use.
Types of Assets: Intangible
Intangible assets are not present in the physical form, which makes it very difficult to evaluate them. Thus, these assets cannot be bought and sold at fair value. These assets include:
* Copyrights: Legal rights granted to the owner of an intellectual property, granting him/her exclusive rights. No one can use that intellectual property without obtaining permission from the copyright owner.
* Goodwill: This is the difference between the current and fair market price of the net asset value (NAV) of a company.
* Trademark: A distinguishing attribute by which a company is readily identified.
Investing Online Resource Center
Whether you are interested in finding out what it’s like to trade online, how a margin account works or you simply want more information on how to better protect yourself online, the Investing Online Resource Center is right where you need to be!
Online trading provides investors with a convenient method in which to take part in today’s financial markets. But don’t let the ease of investing online fool you. It is more important that ever that you become educated and savvy in your financial matters.
About the Investor Online Resource Center
seniors checking over recordsSenior citizens have long been a coveted demographic for financial fraud, but when banks, too, try to get in on the action, something really stinks. The case of a Wachovia client who recently sued the bank for turning a blind eye on a questionable practice that cracked her nest egg, and the attorney who helped her win back her losses, shines light on the hidden relationships between banks and brokerage firms that sell investment products.
In a claim against Wachovia, as in similar cases that securities fraud attorney Mark Tepper said he has tackled, a retired court clerk alleged a bank teller disregarded her request for opening an IRA account and instead told her to speak with a Wachovia financial adviser. The adviser was not an employee of the bank, but worked for its sister company Wachovia Securities, Inc. (now Wells Fargo Advisers), and had a desk on the premises of the bank.
Wachovia disagreed with the $25,000 award, set by the Financial Industry Regulatory Authority, which also ordered an additional $5,525 interest payment to the bank's client.
"The paramount priority of our firm is always to do what is right for our clients. Any implication that practices contrary to that priority ever 'flourished' or have 'been allowed to flourish' in this organization is simply incorrect," a spokesman for Wells Fargo said.
The practice of redirecting seniors to investment specialists, even when they only request simple services such as buying Certificates of Deposit or opening a money market account, is something banks do to develop business for their affiliate companies, the Fort Lauderdale, Fla.-based Tepper said.
"Some banks institute policies like these that reward tellers for referring bank clients to the broker that's sitting in the bank," Tepper, a former New York assistant attorney general, told Consumer Ally. "Elderly people are a targeted group for these aggressive types of referrals because they just seem to be less combative."
In another case Tepper won for a client, an AmTrust bank teller told Jacob Froess, a 56-year-old retired auto mechanic who wanted to purchase a $70,000 CD, that he had to speak with a financial adviser. Unknown to the client, the adviser did not work for AmTrust bank, but for its sister company, AmTrust Investment Services, Inc., which sells mutual funds, annuities and life insurance.
To convince him to abandon his plan for a CD and buy into a high-risk mutual fund instead, the adviser told Froess that CD rates are low and that he could do much better than a CD, according to the lawsuit. To cajole him to pay a $3,157 up-front fee, she explained: "This stuff is so good that you have to pay to get in -- but it is worth it, it is that good! And you will make it back in short order, and make more money."
Froess, who earned less than $25,000 a year and had saved the money in his CD over eight years, had virtually no experience with stocks, bonds, or mutual funds. Despite this, the adviser indicated he had good knowledge of each type of investment, including, astonishingly, options, variable contracts and limited partnerships, the claim said.
When he realized a few months later the investment did not earn any interest and was in fact losing money, he sold it -- at a loss of $12,000.