Jun 29, 2009 8:02 pm US/Eastern
Consumer: Protect Your Money From Investment Fraud
NEW YORK (CBS) ―
With so many telltale signs of a shady investment scheme coming to light now that Bernard Madoff's been convicted, many investors are asking how to protect themselves.
There are several steps you can take to keep your money safe.
"We were individual investors, we did not know him – never met him," one Madoff victim said.
Devastating tales of complete financial ruin were shared at the sentencing of Bernie Madoff Monday. Many want to know if they can take steps to protect their savings. According to moneywatch.com's Jill Schlessinger, the answer is yes.
"I saw a Madoff statement, and I was startled by the simplicity of it," Schlessinger says.
It's vitally important to first examine your statements closely and ask questions about your investments. Make sure there are both gains and losses.
"The biggest red flag that I think was in the whole Madoff scandal is that, throughout the history of this guy investing, he never showed a monthly loss," Schlessinger says.
Investors should also never be afraid to get a second opinion from another advisor or broker.
"Go take it to another investment advisor, go take it to someone else and say, 'is this likely, is this possible, is it potentially credible,'" Schelssinger recommends.
It's also a good idea to check up on who is doing the auditing of the company.
"That, too, is a red flag," Schlessinger advises. "[If] you have an auditor that is teeny tiny for this massive business, it doesn't jive."
You also want to make sure your broker has licenses through the SEC, and see if there are any complaints against him or her. However, keep in mind that this isn't always fool-proof – Bernard Madoff did have the appropriate license.
Finally, you should never place all of your eggs in one basket. Don't let one entity handle all of your business.
"You do want to make sure they are separating the jobs they do. You do the investment advice, you do the trade, another place does the trade, and a whole separate place is where the money is held," Schlessinger says.
These tips can help make sure your investment deal really isn't too good to be true.
For more information on how you can avoid becoming a victim of investment fraud, please click
here.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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