FINRA Investor Alert For High Yield CD Scams By: Brenda Hamilton Attorney
The Financial Industry Regulatory Authority (“FINRA”) has issued a new investor alert called High-Yield CDs: Red Flags That Signal a Scam warning investors to be cautious of investments in certificates of deposit (CDs) that promise to good to be true returns. Certificate of Deposit scams promise interest rates that are substantially higher than current averages. In one instance of suspected email fraud, the pitch appeared to come from a large U.S. bank that supposedly was promoting a CD offered by an international banking partner. At a time when most CDs at U.S. banks and credit unions were offering just over 1 percent for a comparable term, this pitch offered a CD with a 15 percent yield, and contained instructions on how to wire funds.
“Savers continue to face near-historic low yieds on traditional bank products. Fraudsters attempt to take advantage of investor desire for higher yields by luring them into potentially fraudulent CDs that promise both safety and double-digit returns,” said Gerri Walsh, FINRA’s Senior Vice President for Investor Education.
FINRA’s new investor alert provides consumers with “red flags” that indicate a CD offer may be fraudulent, including:
- interest rates that are significantly higher than average;
- emails with addresses that are not originated and sent by the financial institution that is cited in the promotion;
- emails that contain misspellings or grammatical errors;
- promotions that claim to be from a U.S. financial institution that has aligned with an international bank;
- promotions that claim to be for a “limited time only”; and
- promotions that claim to be directed at “best customers” and that require extremely high minimum investments (for example, $100,000).
High-Yield CDs advises investors who believe they have been a victim of a CD scam to contact their financial institution immediately to report a loss or theft of funds through an electronic funds transfer.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490, Rule 506 private placement offerings and memorandums, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration statements on Form S-1 , IPO’s, OTC Pink Sheet listings, Form 10 OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or [email protected]. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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