Securities Bulletin

              SECURITIES bulletin
Each year, members of the North American
Securities Administrators Association
determine the most common ploys used to
cheat Illinois investors out of millions of
dollars. This Top 10 list includes anything
from high-yield, no-risk promissory notes
and variable annuities to Internet “pump-and-
dump” schemes to Ponzi rackets that
ultimately secure returns only for those on
the top of these pyramid-type schemes.
Investors should keep their guards up
anytime they are offered an investment
opportunity. Before making any investment,
investors should ask the following questions:
• Are the seller and the investment product
properly licensed and registered?
• Has the seller given you written
information that explains the investment?
• Are claims made for the investment
realistic?
• Does the investment meet your personal
investment goals?
I urge investors to contact the Securities
Department at 800-628-7937 with any
questions about an investment product,
broker/dealer or adviser before committing
their hard-earned dollars. It pays to
remember that if an
investment sounds too
good to be true, it
usually is.
Jesse White
Secretary of State
Spring/Summer 2005
❶ Ponzi Schemes — Paying early investors with money raised from
later investors. The only people who make money are the promoters
who set the Ponzi in motion.
❷ Unlicensed Individuals Selling Securities — Anyone selling
securities without a valid securities license should be a red alert for
investors.
❸ Unregistered Investment Products — Con artists bypass stringent
state registration requirements to pitch viatical settlements, pay
telephone and ATM leasing contracts, and other investment contracts
with the promise of “limited or no risk” and high returns.
❹ Promissory Notes — Empty promises can leave these notes worth
less than the paper on which they are printed.
  Senior Investment Fraud — Because of their access to lifetime
savings, senior citizens often are the target of con artists peddling
fraudulent or unsuitable investments.
❻ High-Yield Investment Schemes — Promises of triple-digit returns
through “risk-free, high-yield instruments” or something equally
deceptive should signal a red alert.
❼ Internet Fraud — Stock promoters are using online “boiler rooms,”
messaging and fake Web sites to lure investors into “pump-and-dump”
stock schemes.
❽ Affinity Fraud — Con artists are increasingly targeting religious,
ethnic, cultural and professional groups.

 Variable Annuity Sales — Senior investors especially should beware
of the high surrender fees and steep sales commissions agents often
earn when moving investors into these investment products.
➓ Oil and Gas Scams — With oil topping $50 a barrel and continued
Middle East instability, schemes promising quick profits in oil and gas
ventures are expected to be on the rise.
Top 10 Threats to Illinois Investors—2005
IN
THIS
ISSUE
• TOP 10 THREATS TO ILLINOIS INVESTORS—2005 •
• FAQ: RESEARCHING YOUR BROKER OR INVESTMENT ADVISER •
• BROKER/DEALER BRANCH OFFICE REPORTING DEADLINE •
• ENFORCEMENT ADMINISTRATIVE ORDERS •
• INVESTOR EDUCATION REACHES OUT TO STUDENTS •
A NEWSLETTER OF THE ILLINOIS SECURITIES DEPARTMENT • SECRETARY OF STATE JESSE WHITE