WASHINGTON — If you think you're going to miss the money train on Wall Street, Securities and Exchange Commission Chairman John S. R. Shad has some advice:
Look out for the red warning flags. Don't be stampeded into plunking down cash too fast.
With those words of warning, Shad has released his new "Ten SEC Red Flags and Guidelines for Investors."
"Unusually broad and active securities markets," like those of the last two weeks, do not necessarily breed fraud "but investors should be skeptical about get-rich-quick schemes--whatever the level of the Dow Jones average," Shad said Friday.
"The vast majority of securities professionals are honest," he said. "But the first line of defense against securities fraud is a skeptical investor. Investigate before you invest."
Here are the SEC's 10 red flags for investors:
- Reject high-pressure solicitations. Take time to think it over before you commit to invest.
- Be very skeptical of promises of exceptionally high returns. Generally, the higher the return, the greater the risk of loss. If something sounds too good to be true, it probably isn't true.