"Money File"-Don't Take the E-mail Bait
Wednesday, May 23, 2007SUSIE GHARIB: In the money file tonight, e-mail is just the latest vehicle for investment fraud. Here's Chuck Jaffe, columnist at "Marketwatch."
CHUCK JAFFE, SENIOR COLUMNIST, MARKETWATCH: I got an e-mail this week from the chief operating officer of a Colorado technology company looking to raise $4 million through the sale of some private stock. While he'd have been happy to take my money, what he said he really wanted was my help. In fact, he offered a 10 percent commission on any money I raised selling shares in the company, plus up to 2 percent of the corporate stock for getting the job done.
Someone is going to take that deal. And when that happens, this little company will have a lot of agents out there selling private equity to average investors and they'll be breaking the law because anyone who answers this blast e-mail who is not already in the securities business becomes an unregistered securities agent or unlicensed investment adviser. If they sell the stock that way, it's a felony. But the agent going to jail is small solace if you've lost money on a garbage private stock.
The North American Securities Administrators Association came out this past week with its top 10 investor traps. Private equity was just one of them. What all investor danger zones have in common is a sounds good story with enough support so that gullible and greedy investors walk right into the trap. In almost all cases, some common sense and a background check would have provided ample protection to avoid trouble. So no matter how great your next investment opportunity seems, go into the situation certain of just one thing. If it sounds too good to be true, it probably is. I'm Chuck Jaffe.
