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Digital tokens investments may violate securities laws

In early June, the Canadian social media giant Kik began seeking funding to fight the U.S. Securities and Exchange Commission (SEC). They estimated that it would cost 5 million to do so.

When the company initially went into business in 2017, they did so using $100 million in initial coin offerings (ICOs). Startup ventures often fund their efforts using cryptocurrencies like this.

Why must Kentucky companies register securities with the SEC?

A law that emerged out of the Great Depression still guides securities laws today.

The Securities of Act of 1933 has two core objectives: to see to it that investors are given necessary financial information about securities before they buy them and to keep securities from being sold through deceit, misrepresentation or other fraudulent acts.

Remember how your broker makes money

You get a broker or start working with a brokerage firm. Your thoughts focus on how you're going to make money by putting the assets you already control into your investment portfolio. You know that it's crucial for your retirement.

As you do this, don't forget how your broker makes money. They likely get paid when they make trades for you. Each trade generates a commission. There may be other fees as well.

The biggest investment mistakes people make

Investing your money is always a bit of a gamble, no matter how carefully you do it. If you're not financially sophisticated about investments, you probably rely heavily on the advice of your financial advisors.

Just the same, you need to have some idea of the mistakes that happen with investments so that you can keep an eye on what your financial advisor or broker is doing with your money. Here are some of the biggest investment mistakes to avoid:

The importance of securities laws and securities attorneys

Investing nearly always carries some risk. However, there are numerous state and federal securities laws that publicly traded companies and securities professionals must abide by. These help prevent investors from putting themselves at unnecessary risk due to false or incomplete information provided by companies or from less-than-honest brokers and other securities professionals.

Securities laws are in place to guard against insider trading, fraud and market manipulation. They bring needed transparency in reporting. For example, publicly traded companies are required to file reports on a regular basis with the Securities and Exchange Commission (SEC) regarding their financial condition as well as things like executive compensation.

Why investors should know about disgorgement

Even if you don't know what it means, the term "disgorgement" may sound particularly painful. Indeed, it can be painful for those who are guilty of violating securities regulations or engaging in other illegal or unethical business activity.

Disgorgement refers to the repayment of money, with interest, to victims of such illegal or unethical activity. It's a strictly remedial civil action. It's not meant to recover punitive damages.

Lyft investors file class-action suit shortly after its IPO

Initial public offerings (IPOs) can be tricky things. Calculating the value of a stock before it becomes available to the public for purchase isn't an exact science. Uber's IPO earlier this month was widely considered to be a "flop" as it quickly dropped below its IPO price -- although it has since rebounded somewhat.

Uber's chief ride-hailing rival Lyft went public earlier this spring with similarly disappointing results for investors. Some of these investors, however, are taking legal action against the company. In a class-action lawsuit, they're claiming that the company made misleading statements and overstated its market share during its IPO.

What are brokers' responsibilities to investors?

There are plenty of do-it-yourself options out there for people who want to buy stocks and other types of securities. However, many investors turn to brokers for their experience and knowledge. Brokers, like other types of professionals, owe a duty of care to their clients. They are governed by the Financial Industry Regulatory Authority (FINRA).

Brokers have an obligation to get to know their client, their financial situation and their investment objectives -- including how much risk they're willing to take on. They're then obligated to provide suitable investment recommendations based on that information.

Learn to recognize bad investments

Whether you've earned your first big job out of college or been working for years, deciding to begin investing is a big decision. Putting your money to work for your is a wise decision but you should know how to spot a bad investment opportunity. Failing to do so could set you back financially for years.

The fear of making bad investments can scare people from investing but arming yourself with knowledge before you begin seeking investment opportunities can make you more comfortable throughout the process. These are a few things to look for:

Athletes lose millions in bad investments and frauds

Whether at a horse race or in the stock market, there is no such thing as a sure thing. Investments are always risky; in some cases, that is what makes them so potentially lucrative. Everyone has a hot tip for someone who came into a large or unexpected amount of money, but those tips can cool entire careers.

Professional athletes are particularly susceptible to bad investments or outright fraud, as many on this path to wealth do not initially have the preparation to manage it. A financial strategy firm estimated that over the 13 years up to 2017, U.S. athletes in all sports were relieved of a total of $500 million by fraudsters.

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