The following lines aim to provide a guide for reducing the chances of being scammed, while making your investment decision. In order to invest prudently and avoid investment scams, research each investment opportunity and ask questions. The following steps, recommended by the SEC, should be followed:

1. Make sure that the company is registered wit the SEC.
2. It is advisable that you are acquainted with the company's business and its products or services.
3. Read thoroughly the most recent reports the company has filed with the SEC and analyze the company's financial statements. Be on alert if the financial reports are not audited.
4. Find out who is running the company and check if they have ever made money for investors before. Beware if people from the management team have ever had any law suits or been involved in scams.
5. Make sure the broker is registered with the SEC and licensed to do business in your state. Check with your state securities regulator if the broker has been disciplined or have complaints against him.

Be on the look out for the following "red flags" delineated by the SEC:

1. It is highly undesirable to invest in a company that has been subject to an SEC trading suspension. Check the SEC list of trading suspensions on its website.
2. Don't trust brokers who pressure you to buy before you have a chance to evaluate and do your own research about the investment opportunity. Don't believe in promises for spectacular profits or guaranteed returns.
3. More often than not, microcap companies tend to exaggerate the value of their assets. Don't take the company's assets for granted especially when there are accompanied by low revenues.
4. Always cast an eye at the footnotes of the financial statements. Many unusual and questionable transactions are discussed in the footnotes.
5. Keep away from companies if its auditors have refused to certified its financial statement or if they have indicated that the company may not have enough money to continue operations.
6. Beware if the company's management team and promoters own a large part of the stock. The SEC indicates that: "When one person or group controls most of the stock, they can more easily manipulate the stock's price at your expense".

Following the above instruction can significantly reduce the risk of falling victim to an investment scam. And yet, if you somehow happen to become the object of an investment fraud, contact your broker or directly send a complaint to the SEC through the following link http://www.sec.gov/complaint.shtml. Act promptly because by law you only have a limited time to take legal action.