Department of Financial Institutions
10 Traps Could Catch Unwary Investors

Press Release Date:  Wednesday, October 14, 2009  
Contact Information:  Kelly May,Public Information Officer
502-573-3390 x252
800-223-2579 x252

   FRANKFORT, KY (Oct. 14, 2009) – Many people are starting to invest again, hoping to catch the rise in the market as it rebounds. However, investors must watch out that they are not caught by a scam artist promoting a bogus deal.

   The Kentucky Department of Financial Institutions (DFI) today issued its annual list of Top 10 Investor Traps. DFI Securities Division Director Shonita Bossier urges investors who are feeling pressure from the struggling economy to resist the lure of “too good to be true” offers of making money quickly or “guaranteed” returns.

   “An educated investor should be alert at all times. Falling into an investment trap makes it harder to get back on solid financial ground,” Bossier said.

   This year’s list identifies natural resources investments, Ponzi schemes, leveraged exchange-traded funds (ETFs), real estate investment schemes and private placement offerings as the greatest potential threats to Kentucky investors. The complete top 10 list can be viewed online at

   The list is based on scams and traps that DFI examiners have seen in Kentucky and across the United States. The list is compiled by the Enforcement Trends Project Group of the North American Securities Administrators Association, of which DFI is a member. Many of these pitfalls promise high returns to cash-strapped investors but provide little, if any, disclosure of risks.

   “When it comes to investing, verify everything and everyone before you part with your money,” Bossier said. “Call DFI to make sure the person and product are registered and that no complaints have been filed. Research the investment, and make sure you understand all the terms. Information is an investor’s best defense against securities fraud.”

   To verify a product and seller’s registration and complaint history, call the DFI Securities Division at 800-223-2579. For more information on how to invest, including free brochures, links and games, visit

   DFI is an agency in the Public Protection Cabinet. It supervises the financial services industry by examining, chartering, licensing and registering various financial institutions, securities firms and professionals operating in Kentucky. DFI’s mission is to serve Kentucky residents and protect their financial interests by maintaining a stable financial industry, continuing effective and efficient regulatory oversight, promoting consumer confidence, and encouraging economic opportunities.