Prime Bank Instrument Fraud
If you have been approached to invest in “prime bank” instruments, don’t do it! It is a scam. Prime bank scams purportedly involve the trading of prime bank instruments issued or guaranteed by financial institutions such as the World Bank, the International Monetary Fund, or the U.S. Federal Reserve Bank. Promoters of these supposed prime bank investments claim investors are guaranteed to receive high-yield returns in a matter of days or weeks, with little or no risk. According to the U.S. Securities and Exchange Commission, these investments do not exist.
Fraudsters may use complex and official-sounding terms such as, debenture, bank guarantee, private funding project, offshore trading program, trading facility, or guaranteed bank note, in an effort to make the scheme seem legitimate. Oftentimes, promoters will claim that the instruments are available by invitation only to select clients. They may claim these are the “secret” way wealthy people make money and will cite a requirement for secrecy if a potential investor asks for references. Some goes so far as to have investors sign official-looking non-disclosure agreements.
Fraudsters may even hire escrow agents to help perpetrate the charade of legitimacy and foster a false sense of security for the potential investors. They may even falsely claim that escrow accounts will ensure that investors’ funds will be protected from loss.
Promoters of these types of investments may solicit potential investors using social media, newspapers, or classified advertisement publications. Savvy promoters may deny it is a “prime bank” investment, but investors should be very wary of any investment opportunity that involves high-yield, risk-free international finance programs.
What to do about Prime Bank Instrument Fraud?
If you are unsure whether an investment opportunity is legitimate, research it before you hand over your money. The SEC’s Investor Education website is a good place to start.
No matter what type of investment you are considering, you should never invest with unlicensed individuals. Most investment scams are perpetrated by individuals who are not licensed as either a stockbroker or an investment adviser. Before you make any investment with anyone, verify the seller’s licenses and disciplinary history on FINRA BrokerCheck (for stockbrokers and brokerage firms) or the SEC’s Investment Adviser Public Disclosure database (for investment advisers).