Office of Financial Institutions
Investor Alert: Scams Often Hide Behind the Headlines

Press Release Date:  Monday, January 28, 2008  
Contact Information:  Kelly May
Public Information Officer
502-573-3390 Ext 252

   FRANKFORT, Ky. (Jan. 28, 2008) – The Kentucky Office of Financial Institutions (OFI) cautions investors not to allow recent negative economic news and stock market volatility to lead them into high-risk, speculative investments. These securities may be nothing more than fraudulent schemes hiding behind today’s headlines.

   “Con artists follow the news and use investors’ fears to sell bogus products with promises of high return and little or no risk,” said OFI Executive Director Cordell Lawrence.

   Investors nearing retirement are particularly at risk of being targeted by phony investment schemes promising high returns to make up for losses in retirement accounts.

   “We are concerned that investors may allow uncertainty over current market conditions to lead them into decisions they may not otherwise make,” said Securities Division Director James Strode. “Investing in a fraudulent scheme could weaken or devastate an investor’s financial position, potentially wiping out the retirement security he or she worked so hard to build. A hasty decision often can make a bad situation worse.”

   Investors should guard against high-pressure sales pitches, unregistered securities and non-traditional investments such as foreign currency, oil and gas investments, exotic financial products or offers to send their money offshore to so-called “safe havens.”

   OFI reminds investors to:

  • Hang up on aggressive cold callers and delete unsolicited e-mail messages promoting investments opportunities with little or no risk.
  • Contact OFI at or 800-223-2579 to check that both the seller and the investment are licensed and registered. If they aren’t, don’t invest.
  • Request written information about any investment and carefully review it or ask your financial adviser to evaluate it.
  • Use common sense. Get-rich-quick promises are usually signs of investment fraud.
  • If you suspect you’ve been scammed, report it to OFI immediately. Your call could help prevent others from losing money.

   Strode also noted that legitimate financial professionals, if serving their client’s interests first, generally do not recommend changes to investment portfolios based on short-term economic news and market volatility. Investors nearing retirement should be skeptical of any recommendation to liquidate a well-structured, diversified investment portfolio to purchase an alternative investment product. Beware of high commissions, high fees, excessive complexity and undue risk.

   “Whether the markets are up or down, there are always those who will attempt to prey on the investing public,” Lawrence said. “We hope to help Kentucky investors recognize fraud from the outset and to protect themselves and their investments.”

   OFI is co-sponsoring several upcoming events for senior citizens to raise awareness of fraud. For more information on the Campaign for Wise and Safe Investing, or to find a Senior Scam Jam event near you, visit

   OFI is an agency of the Department of Public Protection in the Environmental and Public Protection Cabinet.  It licenses, charters and regulates the activities of state-chartered/licensed depository and nondepository financial institutions. OFI’s mission is to serve the public through effective and efficient regulation that promotes consumer confidence and economic growth.