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Posts Tagged ‘ponzi scheme’

The Securities and Exchange Commission went on the offensive in a big way Monday – cracking down on several shady investment dealers and warning the public about numerous financial scams nationwide.

In a series of announcements, the SEC:

-  charged a Chicago area family with insider trading in a million-dollar scheme
http://www.sec.gov/news/press/2010/2010-178.htm

- revealed that it won a fraud trial in which two Miami companies and and three owners were accused of stealing investor money via inflated mutual fund commissions and fees

http://www.sec.gov/news/press/2010/2010-180.htm

- charged an internationally syndicated radio show host and two others in California with misappropriating $2.5 million in money raised through the fraudulent sale of real estate investment funds
http://www.sec.gov/news/press/2010/2010-186.htm

- accused a Chicago area company and it’s owner with conducting a Ponzi scheme based on a supposed successful real estate business
http://www.sec.gov/news/press/2010/2010-185.htm

- halted a web-based scam that defrauded investors who are deaf
http://www.sec.gov/news/press/2010/2010-184.htm

- charged penny stock promoted with receiving a series of illegal kickbacks to manipulate stock prices
http://www.sec.gov/news/press/2010/2010-187.htm

- charged two Florida-based hedge fund managers and their firms with illegally funneling more than $1 billion of investor funds into a Ponzi scheme operated by Minnesota businessman Thomas Petters.
http://www.sec.gov/news/press/2010/2010-195.htm

- warned individuals and small business about potential investment frauds targeting those receiving lump sum payouts from BP due to the Gulf oil spill
http://www.sec.gov/news/press/2010/2010-193.htm

Taken together, all these actions show that the SEC continues to turn up the heat against financial swindlers who are trying to rob people of their hard-earned money.

Kudos to the SEC … and keep at it!

Related articles

• UPDATE 1-U.S. SEC charges 2 more in Petters Ponzi scheme (reuters.com)
• Richard Dalton Ponzi Scheme Allegations: SEC Freezes Account Of Golden-Resident (huffingtonpost.com)

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You’re not the first person to ask me about investing in Genius Funds – though you are the first person to write me from Pakistan! Proceed with caution before you invest any money, and be sure to read this detailed post about what I found when I did some quick research on Genius Funds.

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Q: I Decided to Open up a Genius Funds Account. I Started Out with a Small Investment to See How it Will Perform. What is Your Opinion on Genius Funds?

A: Before now, honestly, I had never heard of Genius Funds. As I am not a registered investment adviser, I do not offer specific stock picks or mutual fund recommendations. What I do try to provide, however, are investing insights and information that will help you make better investing decisions. I did a bit of homework and can share with you what I learned. In summary, I can tell you that if I personally were approached with the opportunity to invest with Genius Funds, I would decline to do so. Read on for more details.

Short Track Record is Strike #1

First, I discovered that Genius Funds (http://www.geniusfunds.com) manages two investment funds, both focused on emerging markets. One is a stock fund (the Emerging Markets Growth Fund); the other is a bond fund (the World Bond Market Fund). You did not state which fund you bought. In either case, neither fund appears to have an extensive track record as the company just began operation in 2006. Both funds appear to be about two years old, apparently having launched in 2008. That’s Strike #1 for me. You should know a fund’s short, medium and long-term track record. In my view, a longer track record (10 years or more) is better because then you can evaluate a fund’s performance throughout various market cycles (i.e. in up and down markets).

Be Cautious About Promises of Big Returns

Even a routine Internet search to learn about Genius Funds will reveal that there is considerable chatter and debate online about whether or not Genius Funds represent a legitimate investment opportunity – or an outright scam. For me, that’s Strike #2. In fact, some observers have flat out called Genius Funds a “scam” or a “ponzi scheme.” See this article for more details.
http://ponzischemealert.com/blog/genius-funds-scam-long-term-hyip-scam-and-ponzi-scheme-on-the-verge-of-collapse-exponential-growth-factors-catch-up-to-genius-funds-operations/comment-page-1 This is one reason I always advise investors to do their homework and to carefully investigate any investment opportunity before making a purchase decision. Fees and expenses are also important to know, as are a fund’s objectives. The fund’s objectives should match your own. For example if you are investing for aggressive growth, most of your money should not be in a conservative bond fund.

Finally, how a firm is marketed also matters. Genius promises investors outsized returns or “profits” of 1% to 1.9% daily or 6% to 9% weekly. In my opinion, promises of turbo-charged returns are often major red flags when it comes to investments. That’s Strike #3 for me.

Limit Investment Risk with Research

The fact that you have invested what you described as a “small” amount of money into Genius Funds limits your risk and exposure. Only time will tell whether your investment will pay off. For your sake, I wish you the best. In any event, two great resources in the future for fund information – before you buy – are Lipper (http://www.lipperweb.com) and Morningstar (http://www.morningstar.com) Either of these research firms can give you great information and ratings about mutual funds in which you may be interested.

By the way, neither Lipper nor Morningstar had any information about Genius Funds; Apparently, Genius Funds are known as HYIPs, or High Yield Investment Programs. Many financial advisers recommend that investors steer clear from investing money with HYIPs. These are much different than traditional high-yield investments sold on Wall Street, which could be one reason that Genius Funds are not tracked by the major fund research companies. In fact, the Securities and Exchange Commission has said of HYIPs: “These fraudulent schemes involve the purported issuance, trading or use of so-called ‘prime’ bank, ‘prime’ European bank or ‘prime’ world bank financial instruments, or other ‘high yield investment programs.’ The fraud artists…seek to mislead investors by suggesting that well regarded and financially sound institutions participate in these bogus programs.” For more information on the SEC’s warnings about HYIPs, see this link: http://www.sec.gov/divisions/enforce/primebank.shtml.

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