As financial advisors and their firms dip their toes into the world of social media, the British Columbia Securities Commission (BCSC) is already using the digital medium as a tool for investor education and fraud reporting.
Since 2011, the BCSC has had 30 referrals through social media about possible fraud cases, which in turn have led to 10 open cases, said Patricia Bowles, director of communications and education, BCSC, who spoke at the 2013 IFIE-IOSCO Global Investor Education Conference in Toronto on Friday.
"We've had a couple of enforcement cases come through Facebook and we've had a [an individual] who was selling exempt market products illegally come through Facebook," she said, "so again, we've really tied our commission through Facebook and it has brought us more cases."
In addition to creating more awareness of investment fraud, the BCSC's social media campaign — organized by InvestRight, its investor education program — has also informed B.C. citizens that they can bring suspicions of fraud to the regulator, as opposed to the Royal Canadian Mounted Police or the provincial police.
By building awareness and making the public more comfortable with reporting possible cases of fraud, Bowles hopes to increase the odds of fraud victims receiving some of their investment back. Generally, by the time a fraud case gets to the enforcement process the money is gone, she said. However, in trying to stop the fraud early through reports, the potential fraudsters assets could be frozen, which could mean money being returned to the victims.
The BCSC currently uses Facebook, Twitter, YouTube and a blog to reach out to the public on investor education and enforcement matters. As well, the BCSC recently launched a mobile app for the iPhone called "Be Fraud Aware," which people can use to report potential fraud, either through email, telephone or an anonymous tip. The app also allows people to make sure that their advisor is registered or not and whether or not the advisor has faced any disciplinary action.
Most provincial regulators also have social media platforms, for instance the New Brunswick Securities Commission has videos — some covering investment fraud — on YouTube and the Alberta Securities Commission has a Facebook page.
However, there is not necessarily the same emphasis on reporting fraud as there is on enforcement. For instance, Tom Hamza, president of the Investor Education Fund (IEF), a non-profit organization funded by the Ontario Securities Commission (OSC), said the IEF will report possible cases of fraud to the enforcement arm of the OSC, however, the primary focus of the organization is public education. Said Hamza: "We're trying to be the leader in financial education."