Each year, millions of Americans lose money to con artists who convince them to invest in companies through "private offerings" that have "limited or no risk" and the promise of "high returns". In most cases, it is a felony for anyone to solicit funds for capital investment in a company that has not been registered with the Securities and Exchange Commission (SEC). Because most opportunities that seem "too good to be true" usually are, beware of unsolicited investment offers - especially those that come by phone or via the internet.

An investor should never purchase a security that is not registered with the SEC before seeking legal and financial direction from a trusted advisor. Contact your state securities regulator to determine if an investment instrument and the advisor selling it are registered. You can also use the SEC EDGAR database to determine if a company is registered with the SEC.

For more information on this topic, read Policing The Securities Market: An Overview Of The SEC.

This question was answered by Katie Adams.

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