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South Dakota Division of Securities Warns of High-Yield Investment Program Scams





South Dakota Department of Labor & Regulation

700 Governors Drive

Pierre, SD 57501

dlr.sd.gov

 

For Immediate Release:  Tuesday, Dec. 9, 2014
Media Contact:  Dawn Dovre, 605-773-3094

 

South Dakota Division of Securities Warns of High-Yield Investment Program Scams

 

PIERRE, S.D. – The Department of Labor and Regulation’s (DLR) Division of Securities reminds the public to do research before committing to any investment opportunity.

 

High-yield investment programs, also known as HYIP, are commonly found on Internet advertisements and social media posts. The most notable characteristics of a HYIP are the promise of a high return with little or no risk to the investor.

 

“A good rule of thumb is if it seems too good to be true, it probably is,” said Securities Division Director Michael Youngberg. “Make sure you do your homework and know how to recognize a HYIP scam.”

 

The North American Securities Administrators Association (NASAA) provides the following tips for recognizing a HYIP scam.

  • The promise of high daily, weekly or monthly returns.
  • An offer from the company to pay “referral fees” to investors for bringing in
    additional investors.
  • The use of social media to spread the word and praise the program.
  • The promoter provides few details about who runs the company and how
    profits are generated.
  • The promoter may require the investor open an e-currency account to
    invest. E-currency accounts are not licensed as a money transmitter.

 

NASAA also has tips on how to protect yourself.

  • Be sure to check with your securities regulator before investing. Most of these schemes are unregistered investments.
  • Don’t invest more than you can afford to lose. Schemes may involve international operations, which means it may be hard, if not impossible, to get your money back.
  • Do not blindly trust an investment just because your friends or family are involved or if it relates to your religious affiliation.
  • Ask questions about how the returns will be made and who the company officers are. If these questions cannot be answered to your satisfaction, then do not invest.
  • Do not trust the investment just because you receive early returns. Remember that is how they rope you in and get you to recruit your friends.
  • Be wary of the “get in early and get out fast” recommendation. Many HYIPs advertise one way to make profits fast is to invest early then get out early, but you never really know when the scheme is going to stop.

 

The DLR Division of Securities is available to answer questions or concerns about high-yield investment programs. They can be reached at 605-773-4823 or by visiting http://dlr.sd.gov/securities/default.aspx.

 

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