Demystifying the new reporting requirements as part of the second phase of the client relationship model (CRM2) and warning investors about binary options fraud headlined the Canadian Securities Administrators’ (CSA) investor education efforts over the past year.
The CSA details the regulators’ investor education and outreach initiatives for the past year in a report published on Monday, which highlights campaigns to help explain the new CRM2 reports that investors are receiving about the costs of investing and performance reporting as well as to warn investors about the growing threat of binary options scams.
Over the past year, regulators launched a YouTube channel to host four videos that aim to explain some of the new CRM2 requirements. The videos, which were adapted from a series the B.C. Securities Commission (BCSC) developed, are designed to help investors understand what to expect from their financial advisors; the costs of using an advisor; trading costs; and investment performance.
The CSA also launched an effort to help warn investors about possible investment scams involving unregistered, offshore binary options trading firms.
“Across Canada, securities regulators have noted an alarming increase in reports of binary options fraud,” the CSA’s report notes. “A handful of reports in 2014 became dozens in 2015, and hundreds in 2016, with estimated losses growing from thousands into millions [of dollars].”
In addition to efforts to shut down these scams, regulators are working with online advertisers and social media firms to eliminate binary options ads that target Canadians. They’re also trying to warn investors against falling for these particular kinds of scams as well. This initiative includes a dedicated website, a media outreach campaign and an online marketing effort.
“The marketing communications campaign was very successful, with coverage from more than 500 national and international outlets, 10,000 visits to the site and 160 million advertising impressions, with further reach extending into fiscal year 2017-18,” the CSA’s report says.
The CSA’s other central investor education message involves encouraging clients to check advisors’ registration. In the past year, the CSA says that its basic campaign to raise awareness of the importance of checking registration, included new messages to emphasize the importance of checking registration no matter the source of a referral; and, as a way of guarding against affinity fraud.
This follows from research that found one of the primary reasons that people don’t check registration is when they get a recommendation from a professional that they already trust.
Photo copyright: everythingpossible/123RF