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ASC ExternalSite > Investors > Investor Resources > You ASC'd Blog > Posts > Fight Financial Fraud Contest – Week #3 Ponzi Schemes

October 14
Fight Financial Fraud Contest – Week #3 Ponzi Schemes

It’s the season of learning – school is back in session and October is Investor Education Month. To celebrate, we at the ASC are showcasing our financial fraud explainer videos– they’re a great way to learn about how to protect your financial future (without having to go to class!) You’ll even want to take the “test” at the end - it’s a quiz contest for prizes!

To participate in the contest, read the You ASC’d blog and watch the corresponding video every Friday. Then test your knowledge with our Fight Financial Fraud quiz between October 28 and November 4. Quiz participants will be entered into a draw to win one of three $100 gift cards to Indigo Books, which we hope you’ll use to do even more reading about how to become a more informed investor. Click here for contest rules and regulations.

We kick off week three with a blog and video on Ponzi schemes.

Does the name Bernie Madoff ring a bell? He orchestrated one of the longest running and largest Ponzi schemes in history. This type of scheme promises high rates of return with little to no risk for investors. What’s important to know about Ponzi Schemes, is that there is no legitimate investment. The returns that may be received are actually coming from other investor’s money.

Most of the money invested into a Ponzi scheme generally goes into the pockets of the fraudsters running the scheme. To keep the scheme running, some investors may initially see returns, making it believable and sustainable. We all know the saying all good things must come to an end, which also applies to Ponzi schemes (though they are definitely not good things). Eventually investments and new investors will cease, and with no money coming in, the scheme will collapse and investors are typically left with nothing.

Watch the video for more details and to learn ways to identify a Ponzi scheme.

Be sure to check back next Friday for an overview on pump and dump schemes!

Helpful links

Red flags of Investing

Recognizing and avoiding scams in 2016


Top ten investing mistakes