Investor Alert: 

Cobell Indian Trust Settlement Payout Recipients - Be on the Lookout 

for Investment Scams

The SEC’s Office of Investor Education and Advocacy 

is issuing this Investor Alert to help educate investors, 

including individuals receiving lump sum payouts 

from the federal government in connection with the 

$3.4 billion Indian Trust Settlement, about potential 

investment frauds that target recipients of lump sum 

payouts.

The Indian Trust Settlement arose out of a class-action 

lawsuit, Cobell v. Salazar, brought by Native American 

representatives against the federal government. 

The Indian Trust Settlement resolves claims that 

the federal government violated its trust duties to 

individual Indian trust beneficiaries. The Indian 

Trust Settlement was reached in December 2009, and 

in December 2010, the President signed legislation 

approving the settlement and authorizing $3.4 billion 

in funds.

You May be a Target

Recipients of highly-publicized payouts often 

become targets for investment fraud. Scam 

artists may target payout recipients with investment 

opportunities that promise high returns with little or 

no risk, or involve secretive or complex strategies. 

Members of religious or ethnic communities, 

professional organizations, or other close-knit groups 

are likely targets for these scams because of the high 

level of trust that often exists within these groups and 

the tendency of their members to share information 

with one another.

For example, after Hurricane Katrina, we heard about 

scams targeting individuals receiving compensation 

from insurance companies. These scams took 

many forms, including trading programs that falsely 

guaranteed high returns, promoters who touted 

companies purportedly involved in clean-up efforts, 

and classic Ponzi schemes.

We are concerned that individuals receiving lump 

sum payouts, including payments related to the Indian 

Trust Settlement, may become targets for investment 

scams and other frauds. As is true for recipients of 

any lump sum payout, individuals receiving payments 

related to the Indian Trust Settlement should be wary 

of potential investment scams.

Be Skeptical and Ask Questions

One of the best ways to avoid investment 

fraud is to ask questions. Be skeptical if you are 

approached by somebody touting an investment 

opportunity. Ask that person whether he or she 

is licensed and whether the investment they are 

promoting is registered with the SEC. Check out 

their answers with an unbiased source (such as 

the SEC). We have a short publication called Ask 

Questions that discusses many of the other questions 

you should ask of anyone who wants you to make 

an investment. Please review it before making any 

investment decisions.

Investor Assistance (800) 732-0330 www.investor.gov

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Protect Yourself

Take a close look at your entire financial 

situation – this can help you figure out how to 

use your lump sum payout wisely. Below is a list 

of some online resources that may help you decide 

how to use a lump sum payout. Protect yourself by 

reviewing these resources before you invest; your 

payment may have to last you and your family for a 

long time. If you are thinking about investing and 

have any questions, do not hesitate to call the SEC’s 

Office of Investor Education and Advocacy at 1-800-

732-0330, or ask a question using this online form.

•	 Lump Sum Payouts: For information about 

investing wisely after receiving a lump sum payout, 

see Lump Sum Payouts: Questions You Should 

Ask Yourself before You Invest a Dime.

•	 Affinity Fraud: For information about investment 

scams targeting particular groups, see our 

Investor Bulletin on Affinity Fraud.

•	 Ponzi Schemes: For information about Ponzi 

schemes, see Ponzi Schemes: Frequently Asked 

Questions.

•	 Saving and Investing Basics: For general information about saving and investing, see Saving and 

Investing: a Roadmap to Your Financial Security 

through Saving and Investing. This publication is 

also available in Spanish.

•	 Ask Questions: For a list of questions you 

should ask when considering an investment, see 

Ask Questions: Questions You Should Ask about 

Your Investments. This publication is also 

available in Spanish.

Other Resources

Cobell v. Salazar Indian Trust 

Settlement Website: This website 

provides details about the Indian Trust 

Settlement.

Investor.gov: This is the SEC’s 

educational website for retail investors.

MyMoney.gov: This is the U.S. 

government’s website dedicated to teaching 

the basics about managing your money.

The Office of Investor Education and Advocacy has 

provided this information as a service to investors. 

It is neither a legal interpretation nor a statement of 

SEC policy. If you have questions concerning the 

meaning or application of a particular law or rule, 

please consult with an attorney who specializes in 

securities law.

Investor Assistance (800) 732-0330 July 2011

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