Identifying Securities Fraud

How can I identify an investment scam? Well, you have to do your research. Some are easier to spot than others. People contacting you out of the blue over the Internet, pitching you an investment opportunity, probably not a good idea. If it's a brokerage firm, you want to do some research on them. You can go to the National Association of Security Dealers.
You could just do a lot of searching on the Internet to find out if they've had any sanctions against them. This particular broker may have had sanctions against them. You can do a fair amount of research on your own about somebody, a track record. It's a very good idea when you're making an investment to do that.
Say no to any salesperson that pressures you to make an immediate decision. What's the hurry? If he or she doesn't have the time to explain the investment to your regular investment professional, or other party, or if they ask "Can't you make your own investment decisions?" Just say NO! You have the right and responsibility to check out the salesperson, firm, and the investment opportunity in question.
Almost all investment opportunities must be registered with the state you reside in. Call your state Securities Division to enquire about investments you have questions about. Extensive background information on investment professionals and firms should be available for free.
Another types of investment fraud is through private placement offerings, where companies speculating enormous amount of return offer their stocks that promises very high yield of returns. Some of these companies don't even have established business and promise you returns on your money based on their experience, expertise and ideas they have not even established yet. They rely on their salespeople who might not even have broker license, and their tactics and strategy is based on promising return on the revenues that is totally false and misleading. Be extremely cautious about these type of companies.
In the case of the Private Placement offerings, one should exersise extrem caution about the integrity of the sales people. You could ask to see if they posess Broker's licence, or if they had any prior convictions of fraud previously.
If you can't find any information be wary. Before you even consider investing, get the prospectus, review it carefully, and make sure you understand all the risks involved. But remember, even written material sent from the promoter can be fraudulent or misleading.