The Biggest Frauds And How To Avoid Such Schemes: Microcap Stocks

The longer you invest, the greater your likelihood of running across investment fraud. According to the Securities Investor Protection Corporation, regulators estimate that $10 billion to $40 billion is lost to investment fraud in the U.S. every year. The firm attributes $1 billion to $3 billion of that total to microcap stock fraud.

One of the most well-known cases of microcap stock fraud is that of Jordan Belfort, whose memoir, The Wolf of Wall Street, was adapted into a film in 2013. He plead guilty to fraud in connection with his firm Stratton Oakmont, a boiler room which marketed penny stocks using...