Were You Affected by Hurricane Matthew? Beware Investment Scams

Published on October 25, 2016

Unfortunately, scammers take advantage of Americans’ difficult circumstances when disasters hit, and it seems Hurricane Matthew is no exception.

We’re all familiar (unfortunately) with Ponzi schemes and false trading programs that guarantee high returns. According to the SEC’s Office of Investor Education and Advocacy, there are investment scams related to this recent natural disaster to beware. These scams may be from criminals promoting bogus cleanup and repair companies, and those who target individuals who’ve received lump insurance payments as compensation for damages. The SEC warns that individuals should be extremely wary of potential investment scams related to Hurricane Matthew.

As has happened in the past, such as after Hurricane Katrina in 2005, “Some scams are circulated through spam email, promising high returns for small, thinly-traded companies that supposedly will reap huge profits from recovery and cleanup efforts.” Ugh.

It’s so important to protect yourself against investment fraud and other scams. The first rule of defense, says the SEC, is to be skeptical about any investment opportunity and ask a lot of questions. Of key importance is to ask if the person who contacts you is licensed and if the investment they are promoting is registered with the SEC or with a state. Be sure to check their answers with an unbiased source, such as the SEC or your state securities regulator.

Classic signs of fraud are promises of fast and high profits with little or no risk to you. Forget about it! The SEC publishes a handy resource called Ask Questions: Questions You Should Ask about Your Investments that details other questions you should ask of anyone who contacts you about making any kind of investment. It is also available in Spanish.

If you’re received a lump sum insurance payment, be very careful with how you invest this, as it may have to last you and your family a long time and there could be unforeseen expenses to cover that are related to storm damage. The SEC provides this helpful list of online resources; you can also call the agency’s Office of Investor Education and Advocacy at (800) 732-0330 or place a query using this online form.

Self-Directed Investors – Do Your Homework!

The wonderful thing about self-directing your retirement plan—and the alternative assets they allow—is that you, the investor, are in control. As the account owner, you make all your own investment decisions; therefore, it is your responsibility to do thorough research into those investments you intend to include in your self-directed retirement plan.

Whether you wish to include real estate, precious metals, commodities, or unsecured loans in your self-directed IRA—or any of the many other types of nontraditional investments available to self-directed investors—we cannot stress enough the importance of conducting your due diligence before sending us your transaction instructions. As a full-service administrator of self-directed retirement plans, Next Generation Trust Services will review the asset as part of our transaction review, and provide guidance about whether your investment complies with IRS investing guidelines. However, it is up to you, the self-directed investor, to fully understand the investment. We recommend you consult a trusted financial adviser if you have any questions about alternative assets and how they may affect your retirement planning; and of course, you can include the SEC’s handy resources as part of this research.

When you’re ready to make your investment, our professional team will assist you and we can answer your questions about self-direction as a retirement strategy, and about the types of investments that are allowed or that are prohibited. You can reach Next Generation Trust Services at 973-533-1880 or 888-857-8058 or Info@NextGenerationTrust.com.