Investment frauds have risen considerably during the pandemic. Fraudsters arise and target vulnerable people in every challenging economic setting that arises on the global stage. The well-trodden road of reeling in novice investors by offering unrealistic returns on investment is ever-present.
Many fraudulent brokerages have surfaced leaving the trail of financial devastation in their wake. The typically the recent tactics used in scams and frauds to draw unwary investors into an impossible situation begins by an out-of-the-blue contact on a digital platform such as Whatsapp or Instagram. It has been reported that contact is made on the pretext that the person is trying to re-establish a lost contact and the possible scammer then sets about befriending and convincing the target that they can open up an investment opportunity that will bring life-changing financial rewards.
Joanna Bailey, who heads Giambrone & Partners banking and finance team points out "questionable brokers spend quite some time in establishing trust with the novice investors and building up confidence, to the degree that they are completely trusted and the investor believes everything that they are told, particularly as the investors have been selected and targeted because they do not have direct knowledge or experience in the markets." Joanna further commented "the economic consequences of lockdown have left many people in a poor financial position and it is tempting to take a chance when presented with an "investment opportunity" that offers a high return."
Giambrone & Partners' banking and finance team emphasises It is essential to look closely at any investment broker and ensure that they are properly regulated within the jurisdiction that they are conducting their day-to-day business. Also, if you are inexperienced and do not understand the complexities of the markets it is strongly advised that you should not consider taking up any opportunities extended to you.
Giambrone & Partners has received several enquiries from individuals who claim to have experienced significant losses when dealing with OA Capital Holdings Ltd, a new brokerage operating mainly from Canada and the USA, it is alleged that the losses may amount in total to $2.5million.
Frequently the techniques employed by companies involve persuading the novice investor to risk small amounts of money initially. Then indicating to the novice investor that they have made significant profits and encouraging them to make further investments. Certain schemes suggest, after a period of "successful" trading that they transfer to a VIP account or a different bank account which removes them from the initial company that is actually regulated to one that is not. Another regularly used technique involves indicating to the novice investor that the market is strong and they have made significant profits and should take advantage of the rising market and their ongoing success However, usually, as soon as the target wishes to take money out of their funds they are told that they must send more money to release the funds or suddenly their account begins to lose money and more money is needed to "trade" out of the poor situation.
It is far better to be cautious and not be pushed into risky decisions or be persuaded that they must take advantage of an incredible opportunity offering an extraordinarily high return on investment and must be acted on very quickly or the chance will disappear, as notwithstanding what the brokers may say, investment opportunities do not vanish in 24 hours and you will not miss out on an opportunity of a lifetime if you exhibit caution and think carefully about where you chose to invest your money.
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