Promising high returns with little or no risk, investment traps are usually baited with slick sales pitches, according to the Kentucky Office of Financial Institutions, which recently revealed its annual Top 10 list of traps most likely to ensnare unwary investors.

It is important to remember that there are no guarantees in investing – and if it sounds too good to be true, it usually is, OFI Executive Director Cordell Lawrence said.

Kelly May, spokeswoman for the OFI, said Kentucky mostly sees fraud and oil/gas scams, but unlicensed individuals, unregistered products and investment seminars are also common traps.

&#8220But all of these are a problem in every state,” May said.

OFI, an agency of the Department of Public Protection in the Environmental and Public Protection Cabinet, licenses, charters and regulates the activities of state-chartered/licensed financial institutions.

This year’s top 10 traps:

Affinity fraud. Con artists are increasingly targeting religious, ethnic, cultural and professional groups. Con artists may gain trust by joining the group, or they may recruit respected members of the group to by convincing them that a fraudulent investment is legitimate.

May said affinity fraud is more a technique than an item to be sold.

&#8220It’s someone that tries to fit in and tries to convince you that they have something good,” May said, all while appearing polished, with business card and credentials in hand.

Foreign exchange trading. Foreign exchange (forex) trading can be legitimate for governments and businesses, and it can even be appropriate for some individuals. But the average investor should be wary when it comes to these complex markets, according to May.

Internet fraud. Scamers continue to use technology to lure investors into pump-and-dump schemes. Be wary of investments pitched through unsolicited e-mails, instant messages and phony Web sites.

Investment seminars. Promoters of unsuitable investments are increasingly seeking potential investors, particularly seniors, by offering seminars. Many of them promise a free meal along with higher returns and little or no risk. The meal may be free, but the investment is often risky and costly.

&#8220Our advice is go take the free lunch. You’re allowed to listen, just make sure you research it before you apply your money to it. Make sure it’s what you need,” May said. &#8220With the investment seminars, some of them are really good, but occasionally we see a representative or an investment advisor giving them a free lunch and trying to get them to switch to something that’s not appropriate for them.”

Oil and gas scams. The OFI says rising oil and natural gas prices have increased the appeal of energy investments. Most of these investments are highly risky and not appropriate for smaller investors.

&#8220Kentucky is not the highest top-producing state, but it is one of the higher producing oil-producing states, and oil and gas investments are complicated in general …” May said. &#8220Oftentimes the oil well is in one state, the business office is in another state and sells to every state in general.

&#8220They’re highly risky. Oftentimes when it starts, it looks like it will pump all this oil, and it may pump only just a little. With high risk comes high reward, but … there is a risk it will not do as well as the sellers hoped.”

Prime bank schemes. Promoters of these schemes offer to let the little guy in on what they claim are financial instruments from elite overseas banks, usually offered only to the world’s wealthiest investors. According to May, prime banks do not exist, and the scam artists only create a profit for themselves.

Private securities offerings. According to the OFI, more and more con artists are trying to increase the number of private securities offerings under Rule 506 Regulation D of the Securities Act of 1933 – to attract investors without having to go through the full registration process. Although sometimes legitimate, these offerings are often associated with fraud.

Real estate investment contracts. Investments in real estate long have been viewed as a sure thing, with little downside risk and the potential for substantial returns. Even if an investment involves real estate, it may still be a security subject to full regulation under state and federal securities laws.

Unlicensed individuals and unregistered products. Anyone selling securities or providing investment advice usually must be licensed. It should raise a red flag for investors if someone engages in these activities without a valid license, May said.

Unsuitable sales. What might be suitable for one investor might not be right for another. Securities professionals must know their customers’ financial situation and refrain from recommending investments they have reason to believe are unsuitable.

Investors should contact OFI’s Securities Division at (800) 223-2579 with any questions about an investment product, broker or adviser before making an investment.

&#8220The best time to call us is before you part with your hard-earned money,” Lawrence said. &#8220It only takes one bad decision to wipe out your savings.”