Gen Bus Final draft

Gen Bus Final draft - EXECUTIVE SUMMARY Investors can...

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EXECUTIVE SUMMARY Investors can protect themselves from being affected by fraud, particularly Ponzi schemes, if they are familiar with the warning signs of such scams. Partaking in fraudulent investment activity causes individuals to lose faith in the transparency of the financial markets. With less people willing to put their money into the system, the whole economy will suffer. In our investigation we examined past instances of Ponzi schemes and sought reasons as to why no one realized that anything unethical was happening. From these observations along with interviews of experts in the finance field, we were able to come up with recommendations for investors to protect themselves from unknowingly trusting placing in their savings in a Ponzi scheme. Analysis of our findings revealed these elements for investors to look out for when working with a financial planner: Consistent Returns . With all investments the average return over a period of time should not exceed the average return of the market as a whole. If a fund is consistently beating market returns, an investor should look into whether it is a legitimate practice. Guaranteed Returns . In the stock market there is always an element of risk and it is impossible for anyone to guarantee a certain return. This is a clear sign that something suspicious is going on. Fund Manager’s Unwillingness to Explain their Strategy . Many times when fraud is occurring the schemer is able to lure clients by using technical terms and explanations that the average investor does not understand. It is important to ask questions and understand exactly what your money is going into before investing with anyone. Based on our findings we recommend that investors take more time and care when making financial decisions. While there are regulatory agencies meant to protect individuals from Ponzi schemes, it is the responsibility of each person to look out for themselves and take precautions because it is impossible for the government to control all fraud.
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Introduction In the last decade financial news has been filled with stories of high profile fraud scandals. Such cases as Enron, WorldCom and Bernie Madoff have stunned the public and left millions in ruins when they saw their investments shrivel up. There have even been instances where victims have been in such despair over losing everything that they resorted to suicide. When fraud occurs, the results can be devastating. Investors lose faith in the financial market. This can have devastating affects not only for those directly involved but for the economy as a whole. In this report will look at one type of fraud in particular, Ponzi schemes. The subject has made headlines in recent years for the discovery of a multi-billion dollar Ponzi scheme run by Bernie Madoff. He had managed to continue his scheme for almost two decades without question from investors or regulatory agencies. The following study will discuss why Madoff and other schemers have gotten away with fraud
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This note was uploaded on 01/23/2012 for the course GEN BUS 304 taught by Professor Timwelnetz during the Spring '09 term at Wisconsin.

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Gen Bus Final draft - EXECUTIVE SUMMARY Investors can...

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