By Hal M. Bundrick
NEW YORK (MainStreet) ¿ The highly anticipated Halloween season premiere of "Treehouse of Horror: The Investments Episode" is here. The North American Securities Administrators Association (NASAA) has released its annual list of scary financial products, practices and services that should frighten even the savviest investor. And this year, the NASAA has heightened the drama with threats facing small business owners.
"With the roll out of rules required by the JOBS Act, investors and small business owners alike must be on heightened alert for questionable investment offers and services," says Andrea Seidt, NASAA President and Ohio Securities Commissioner.
The #1 Scary Thing for investors? Private offerings. The elimination of the 80-year ban on the public promotion of private offerings, mandated by the JOBS Act, strikes the most fear in the hearts of NASAA members. Investors beware.
"Whether a crowdfunding portal or an accredited investor aggregator, it is important to do your due diligence and to understand that use of an unregulated third party to provide such services does not change your obligations under federal and state securities laws," Seidt says. "Investors are not alone in their potential to be scammed. Using a fraudulent portal means both the business and the investor stand to lose."
Here are the Top 10 financial products and practices threatening investors and small business owners, as compiled by the securities regulators in NASAA's Enforcement Section:
2013 Investor Threats
1. Private Offerings -- Though these investments are only available to wealthy individuals, the lure to put money into sophisticated startups and exotic technologies is expected to be fraught with fraud.