Advice from unregistered individuals and binary options scams top the Alberta Securities Commission's (ASC) list of risks to investors in 2017.
The annual list of five risks is designed to help Albertans detect fraudulent activity before falling victim to investment fraud, according to the ASC's announcement, released on Tuesday.
The ASC encourages investors to conduct their own independent research before engaging in an investment that may seem lucrative on the surface. The regulator has produced a website, Checkfirst.ca to help investors learn more and protect themselves from fraudsters.
View the slideshow for the ASC's top five risks that you should share with your clients:
Top five investor risks for 2017Slideshow
1. Unregistered sources
Remind clients that most people selling securities or offering investment advice must be registered and that there are limited exceptions to this rule. Investors can be proactive and check an individual or firm’s registration as securities regulators will only register firms and individuals that meet certain proficiency, integrity and solvency requirements. A Canadian Securities Administrators’ website, Aretheyregistered.ca, will help investors learn more about the person offering advice or investments.
2. Binary options scams
The ASC stresses that there are not any registered binary options dealers in Alberta or Canada. Investors in Alberta who are victim to these scams lose more than $20,000 on average, according to the regulator’s research.
3. Offshore investments
“Sending money to companies with ‘offices’ in countries overseas is a red flag of investment fraud,” the ASC’s announcement states. Current popular offshore investment scams include binary options, foreign exchange and commodity trading. Investors should be warned that if they lose money in these schemes, it could be difficult or impossible to recuperate their money.
4. Deceptive online advertising
Individuals who are behind such fraudulent online advertising schemes will often use social media, text messages and online pop-up ads to attract investors. They may use images of celebrities, without those celebrities’ permission, to imply that the individual falsely supports the investment and attract investors.
5. Being lured by the “next big thing”
Caution is necessary when considering an investment in an emerging industry as fraudsters can spread false information about new companies, according to the ASC. Thus, investors should also be warned about investment opportunities connected to natural disasters, epidemics or the current state of the economy. For example, when the Zika virus was spreading rapidly in the Western world, fraudsters began promoting investment opportunities in vaccines for the illness.
Watch the slideshow on your computer or tablet.
Photo copyright: CSA