How to Smell a Rat: The Five Signs of Financial Fraud

Overview

In December 2008, a well-regarded member of the finance community,former NASDAQ chairman, huge charitable contributor, and pillar ofNew York society admitted to his sons the $65 billion he managedfor hedge funds, charities, foundations, Hollywood stars, andmyriad smaller investors was a fraud—a Ponzi scheme.

2008 and 2009 will be remembered for bear markets, a globalcredit crunch, and some of the largest investment scamsever. But these scams are nothing new—from Charles Ponzi ...

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How to Smell a Rat: The Five Signs of Financial Fraud

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Overview

In December 2008, a well-regarded member of the finance community,former NASDAQ chairman, huge charitable contributor, and pillar ofNew York society admitted to his sons the $65 billion he managedfor hedge funds, charities, foundations, Hollywood stars, andmyriad smaller investors was a fraud—a Ponzi scheme.

2008 and 2009 will be remembered for bear markets, a globalcredit crunch, and some of the largest investment scamsever. But these scams are nothing new—from Charles Ponzi toRobert Vesco to Bernard Madoff—they ve been repeatedthroughout history, and there will certainly be more to come in thefuture. But the good news is fraudsters often follow the same basicplaybook. Learn the playbook—and know how to ask the rightquestions—and financial fraud can be easy to detect andsimple to avoid.

Some advisers start intending to embezzle. Others evolve toit—as Madoff claims. Either way, it's structurally the same,and you can learn ways to identify both intended and possiblefuture fraud. Throughout your investing life, you may be presentedwith opportunities that seem too good to be true. In How toSmell a Rat: The Five Signs of Financial Fraud, trustedfinancial expert Ken Fisher provides you with an insider's view onhow to spot potential financial disasters before you commityour money to a scam.

Filled with in-depth insights and practical advice, thisreliable resource takes an engaging look at recent and historicexamples of fraudsters, how they operated, and how they could havebeen easily avoided. Fisher then shows you quick, identifiablefeatures of potential financial frauds and arms you with questionsto ask when assessing money managers.

With this newfound knowledge, you can learn to spot red flags,such as:

  • Advisers with direct access to investors— funds
  • Firms with numbers that seem "too good to be true"
  • Managers with fees that are too low—Madoff didn't chargeany fees, he just charged for trading!

There should be a premium for integrity. Asking the rightquestions and performing the proper due dilligence go a long waytoward finding a firm that insulates you from financial fraud. Withthe help of trusted financial expert and bestselling author KenFisher, you'll be better prepared to identify and avoid financialscams that could instantly destroy the wealth you've worked so hardto build.

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Editorial Reviews

From the Publisher
With five straightforward rules that would have saved any investor from Bernie Madoff, investment firm CEO and Forbes columnist Fisher (100 Minds That Made the Market) gives readers a secure plan for fraud-proof investing, worthwhile for novices and sophisticated financiers alike. Using the example of everyman “Jim,” a precarious investor navigating shark-filled waters, Fisher presents a clear, fast-paced, tightly organized guide to principles like “Too good to be true usually is,” and “Due diligence is your job, no one else's.” Fully-referenced data, insider details, laser-focused statistical digressions, and the finer points of practical investing keep pages turning. Readers will value the practical, easy-to-follow models of solid, transparent investment strategies and examples from Fisher's experiences as CEO of his own investment firm. Fisher also includes suggestions for further reading and appendices that reproduce previously-published comparisons of different asset allocations, information for small business owners and short biographies of market-movers. Much more than what to avoid, Fisher’s concise guide should be highly illuminating and confidence-building for anyone with a bank account. (Aug.) Starred review (Publishers Weekly, September 2009)

Using well-known examples from recent headlines like Bernard Madoff and R. Allen Stanford along with a bevy of historical scam artists, Fisher details the red flags that should alert investors. They are: advisers who have access to your money; promises of returns that are too good to be true; mumbo-jumbo that takes the place of explaining investing strategy; fake benefits like exclusivity, and relying on someone else for due diligence. (Associated Press)

Publishers Weekly
In the wake of Bernie Madoff's $65 billion Ponzi scheme comes this book that helps listeners invest safely and identify financial scams big and small. As straightforward as it sounds, the book is surprisingly entertaining, featuring an allegory of a cautious investor, stories about fraudsters throughout history and the five rules to evade scams. Scott Thomsen delivers a vivid reading and bypasses the pitfalls of dryness and one-dimensionality that plague so many narrators of financial and business audio books. The material allows Thomsen to loosen his collar and convey the information (and help the medicine go down) with personality and panache. A Wiley hardcover (Reviews, Sept. 7) (Sept.)
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Product Details

  • ISBN-13: 9780470526538
  • Publisher: Wiley
  • Publication date: 7/27/2009
  • Series: Fisher Investments Press Series
  • Edition number: 1
  • Pages: 224
  • Sales rank: 1,038,566
  • Product dimensions: 6.20 (w) x 9.10 (h) x 0.90 (d)

Meet the Author

Ken Fisher is best known for his prestigious 'PortfolioStrategy' column in Forbes magazine, where histwenty-five-year tenure of high-profile calls makes him the fourthlongest-running columnist in Forbes' 90-plus-year history. Kenis the founder, Chairman, and CEO of Fisher Investments, anindependent global money management firm. He is on InvestmentAdvisor magazine's prestigious IA-25 list of the industry's most influential people; is the award-winningauthor of numerous scholarly articles; and has published fiveprevious books, including the New York Times bestsellers The OnlyThree Questions That Count and The Ten Roads to Riches—both ofwhich are published by Wiley. Ken has been published, interviewed,and/or appeared in most major American, British, and German financeor business periodicals. He has a weekly column in Focus Money,Germany's leading weekly finance magazine.

Lara Hoffmans graduated from the University of Notre Dame with aBA in theatre. She is a content manager at Fisher Investments andcontributing editor of MarketMinder.com. She also coauthored withKen Fisher the bestsellers The Only Three Questions That Count andThe Ten Roads to Riches.

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Table of Contents

Acknowledgments.

Introduction.

Chapter 1: Good Fences Make Good Neighbors.

Chapter 2: Too Good To Be True Usually Is.

Chapter 3: Don't Be Blinded by Flashy Tactics.

Chapter 4: Exclusivity, Marble, and Other Things That Don'tMatter.

Chapter 5: Due Diligence Is Your Job, No One Else's.

Chapter 6: A Financial Fraud-Free Future.

Appendix A: Asset Allocation - Risk & Reward.

Appendix B: Same But Different—Accounting Fraud.

Appendix C: Minds that Made the Market.

Notes.

Index.

About the Authors.

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Sort by: Showing 1 – 10 of 11 Customer Reviews
  • Anonymous

    Posted August 28, 2009

    If you plan on hiring an investment adviser - READ THIS BOOK FIRST!

    Great book. Very useful, easy to read, actually funny in parts.

    4 out of 4 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Posted September 1, 2009

    I Also Recommend:

    Very relevant

    Picked this up at an airport and it kept me engrossed through my flight. With all the news about Madoff, it's easy to worry about who is and who might be the next Ponzi guy. But this book makes it very easy to do the right kind of due diligence. I also appreciated the historic examples and anecdotes. Who knew Joe Kennedy was such a chicken thief? Apparently FDR!

    3 out of 3 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Posted September 2, 2009

    I Also Recommend:

    Take this book with you when interviewing advisors

    This book was excellent, to the point, and will be invaluable to me. I am taking it with me next Thursday when I am having a meeting with a possible money manager. I'm opening it a page 36 and asking those questions and checking his answers. Thanks to this book I will not be scammed.

    2 out of 2 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Posted October 12, 2009

    more from this reviewer

    Savvy guide to avoiding con artists

    The unlamented year of 2008 was a terrible time for investors. The news that money wizard Bernie Madoff stole some $65 billion from his investment clients with a giant pyramid scheme added insult to injury. Though already in his 70s, Madoff received a 150-year prison sentence for his thievery. Many felt the punishment was too light. The world is full of crooks and charlatans like Madoff. Fortunately for investors, they often give themselves away if you know how to spot them. In this savvy manual, business journalist Ken Fisher (writing with investment expert Lara Hoffmans) details five warning signs that can reveal crooks posing as financial advisers. getAbstract recommends this book to investors who are suspicious and to those who ought to be.

    1 out of 1 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Posted September 8, 2009

    No Fear of Scams

    Picked this up just because the title seemed intriguing. Glad I did. I've retained some very valuable lessons on avoiding those situtaions that have the potential to end up like another Madoff. Besides the useful tips it was a snappy read, enjoyable and even funny. Glad I read it, and I recommend it highly.

    1 out of 1 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Posted November 15, 2009

    Valuable advice

    If this book were required reading in high school or college, loads of scamsters would be out of business. It is easy to follow and tells you exactly what you need to know to avoid most frauds.

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted October 26, 2009

    I Also Recommend:

    An excellent read.

    A good read for those who want to know how to avoid being wrong.

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted June 10, 2010

    No text was provided for this review.

  • Anonymous

    Posted April 8, 2011

    No text was provided for this review.

  • Anonymous

    Posted December 26, 2009

    No text was provided for this review.

Sort by: Showing 1 – 10 of 11 Customer Reviews

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