A confidence trick or confidence game (also known as a bunko, con, flim flam, gaffle, grift, scam, scheme, or swindle) is an attempt to defraud a person or group by gaining their confidence.
Persons of any level of intelligence are vulnerable to deception by experienced con artists. Confidence tricks exploit human weaknesses like greed, dishonesty, vanity, but also virtues like honesty, compassion, or a naive expectation of good faith on the part of the con artist.
The confidence trickster often works with one or more accomplices called shills, who help manipulate the mark into accepting the con man's plan. In a traditional confidence trick, the mark is led to believe that he will be able to win money or some other prize by doing some task. The accomplices may pretend to be random strangers who have benefited from successfully performing the task. Confidence Trick
A Ponzi scheme is a fraudulent investment operation that involves promising or paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business. It is named after Charles Ponzi.
A Ponzi scheme has similarities with a pyramid scheme though the two types of fraud are different.
A Ponzi scheme usually offers abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going.
The system is doomed to collapse because there are little or no underlying earnings from the money received by the promoter. However, the scheme is often interrupted by legal authorities before it collapses, because a Ponzi scheme is suspected and/or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases. Ponzi Scheme
A fraudulent moneymaking scheme in which people are recruited to make payments to others above them in a hierarchy while expecting to receive payments from people recruited below them. Eventually the number of new recruits fails to sustain the payment structure, and the scheme collapses with most people losing the money they paid in.
From the day the scam is initiated, a pyramid scheme’s liabilities exceed its assets. The only way it can generate wealth is by promising extraordinary returns to new recruits; the only way these returns can be paid is by getting additional investors. Pyramid Scheme
Stock traders make their money by taking a commision of the stock trades they make on the behalf of their client. Everytime a stock is bought or sold, the trader makes money regardless of whether the client should purchase the stock. The stock may lose money, the amount of tax due by the client may increase and the client's money may be put in undue risk but the trader will still make their commission.
Therefore, an unethical trader can increase their own personal profit or profits of their company by increasing the number of trades they make. Instead of putting the client's money in long term investments, they will move the money quickly from stock to stock and fund to fund, making a fee each time they do this.
Churning has been found amongst small time brokers as well as top level executives of major firms. Churning
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