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Common Characteristics of Ponzi Fraud Schemes

According to Reuters, as investors continue to consider the magnitude and effects of Bernard Madoff’s alleged Ponzi scheme, the SEC reports that the number of such schemes is not on the rise, but their magnitude is. The SEC also reports that successful Ponzi schemes have certain factors in common. The creator of the scheme is generally very charismatic, their investments tend to appear very successful, although specific information about them is hard to obtain, and the investment advisors are usually not registered with the SEC. This should serve as a warning to investors to fully investigate investment opportunities before committing to them.

 

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