The "Red Flag" List

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Rat River Trapper

The "Red Flag" List

Post by Rat River Trapper »

High Yield Investment Programmes almost always contain common elements that the cautious person should recognize as "Red Flags" if solicited to participate and invest in one. While a programme may not demonstrate all of the items below, the presence of one or more of them should make you very nervous.
  • The deal structure is gratuitously complex.
  • Meaningless, inapplicable, or unnecessary transaction documents are involved.
  • "Offshore" transactions.
  • A lack of references, or unverifiable references regarding prior successful deals.
  • Advance fees.
  • The underlying deal, company, or borrower is not creditworthy.
  • Nutty business plans, e.g. diamond mines in Siberia.
  • Claims of secret Vatican involvement.
  • Name dropping without substantiation.
  • Foreign language documentation.
  • A "proprietary" financing technique.
  • Websites or promotional material that look impressive, but convey no real or verifiable information about the company or promoter.
  • Inability to provide proof of licensing, securities registration, or a corporate registration with licensing and regulatory agencies.
  • Consistently ambiguous language in documents and correspondence.
  • "Explanatory" letters that are inconsistent with documents provided.
  • The promoters provide increasingly creative reasons for delays. E.g. mail, currency exchange, differences in time zones.
  • Numerous unsuccessful applications, usually blamed on the lender, for various reasons, e.g. miscommunication, underwriters don't understand the deal.
  • Repeated requests for additional information or requirements from "third parties."
  • "Righteous" indignation and threats to pull out when called upon to provide explanations or references.
  • Threats to sue for "commissions earned", libel, or slander, due to the investor's complaints of lack of performance by the promoter.
JamesVincent
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Re: The "Red Flag" List

Post by JamesVincent »

Dont forget such wonderful English phrases like "fund your project" or terms like "barrister Dr.".
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paulbrooks16

Re: The "Red Flag" List

Post by paulbrooks16 »

What is "RED FLAG" List?
Give me some short information about this.
Brandybuck

Re: The "Red Flag" List

Post by Brandybuck »

Rat River Trapper wrote:
  • The deal structure is gratuitously complex.
  • Meaningless, inapplicable, or unnecessary transaction documents are involved.
  • The underlying deal, company, or borrower is not creditworthy.
  • Nutty business plans, e.g. diamond mines in Siberia.
  • A "proprietary" financing technique.
Gee, that sounds like credit default swaps! Oh if only Wall Street had used your list!
Russell
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Re: The "Red Flag" List

Post by Russell »

Rat River Trapper wrote:High Yield Investment Programmes almost always contain common elements that the cautious person should recognize as "Red Flags" if solicited to participate and invest in one. While a programme may not demonstrate all of the items below, the presence of one or more of them should make you very nervous.
  • The deal structure is gratuitously complex.
  • Meaningless, inapplicable, or unnecessary transaction documents are involved.
  • "Offshore" transactions.
  • A lack of references, or unverifiable references regarding prior successful deals.
  • Advance fees.
  • The underlying deal, company, or borrower is not creditworthy.
  • Nutty business plans, e.g. diamond mines in Siberia.
  • Claims of secret Vatican involvement.
  • Name dropping without substantiation.
  • Foreign language documentation.
  • A "proprietary" financing technique.
  • Websites or promotional material that look impressive, but convey no real or verifiable information about the company or promoter.
  • Inability to provide proof of licensing, securities registration, or a corporate registration with licensing and regulatory agencies.
  • Consistently ambiguous language in documents and correspondence.
  • "Explanatory" letters that are inconsistent with documents provided.
  • The promoters provide increasingly creative reasons for delays. E.g. mail, currency exchange, differences in time zones.
  • Numerous unsuccessful applications, usually blamed on the lender, for various reasons, e.g. miscommunication, underwriters don't understand the deal.
  • Repeated requests for additional information or requirements from "third parties."
  • "Righteous" indignation and threats to pull out when called upon to provide explanations or references.
  • Threats to sue for "commissions earned", libel, or slander, due to the investor's complaints of lack of performance by the promoter.
WOW... That's a big list...
Useful information, thanks for the heads up!
AndyK
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Re: The "Red Flag" List

Post by AndyK »

Verbatim quoting of a prior post is frowned on -- unless there is some highlighted section which then receives comments.

A total quote followed by "WOW!" or something equally lacking in content is meaningless and annoying.
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wserra
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Re: The "Red Flag" List

Post by wserra »

Unless, of course, it's followed by editing in a spam link. Then the poster gets the boot.
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Burnaby49
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Re: The "Red Flag" List

Post by Burnaby49 »

But I have to say it's impressive that somebody is reading a posting from 2011.
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https://www.youtube.com/watch?v=XeI-J2PhdGs
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wserra
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Re: The "Red Flag" List

Post by wserra »

Unless, of course, it's followed by editing in a spam link.
"A wise man proportions belief to the evidence."
- David Hume