Due Diligence and HYIP: can one limit the risk of being scammed?
After the 50 billion dollar scam of the century that “Bernie” Madoff confessed to, the world of private bankers is in disarray. Notwithstanding their professed very high standards of due diligence, many of them fell for the regular returns this ponzi scheme provided. So, could they have prevented this from happening?
The blunt answer, in retrospect, is yes, they could have. The warning signs were numerous, serious industry publications warned off investors as long as nine years ago. Here are the warning signs again as a reminder:
1. Opaque structure
2. Clockwork regular returns over the years
3. Obscure Fiduciary Service Provider
4. Warning Articles in Industry magazines
For HYIP proposals on the Internet, other warning signs should warn off anyone not indulging in sheer gambling or disproportionate carelessness:
1. More than 1.5% of daily returns
2. Hourly returns
3. Mention in a scam database with a HYIP monitor
4. Warnings on forums
There is no sure fire way of preventing a determined scammer or a serious hyip site from suffering a setback because the investments they made did not come through. It is when one has to hope that the investment that gets lost will not write off all the profit.
Unless you have put all your eggs in one basket, this is unlikely. The trick is to diversify enormously and with numerous small amounts. Its a lot of work but the rewards are great.
