CAUSES OF INVESTMENT FRAUD AND SUGGESTIONS TO PREVENT IT

Abstract

The main causes of investment fraud are highlighted. Among them the following are named: the desire to invest and receive profits (usually, with inflated requirements for potential profits, unrealistic estimation of return on invested funds and probable profitability of any investment projects); lack of attractive and clear proposals for investing one's funds or lack or unavailability of information about objects and projects for investment; lack of knowledge about independent management of investment resources. The work algorithm of investment fraudsters is studied. It consists in step-by-step provision of information on pseudo-investments and, accordingly, step-by-step "draining" gullible investors of their funds according to thought-out beforehand fraud instructions.

The available legal proposals for investing funds, which are implemented today and which are expedient to use in the future to preserve and increase one's financial resources, are analyzed. Among them: placement of funds on deposits in banks, purchase of bonds (including war bonds); starting, running, developing a business. It is noted that potential investors should pay attention to the Investment Passports of Territories and Communities, Subsurface User’s Investment Atlas, which contain descriptions of objects for investment. It is substantiated that for potential investors who, for various reasons, cannot independently manage business and investment projects, it is expedient, at the state and local authorities levels, to organize projects, which will both deliver positive outcomes for investors and bring about synergistic positive effects. It is noted that at the state level, it is necessary to react as quickly as possible to the emergence of illegal, criminal fraud schemes, and all citizens, so as not to fall into the fraudsters’ “snare”, should improve their financial and economic literacy and psycho-emotional stability.