As part of Crime Prevention Week efforts, the Ontario Securities Commission is urging investors to take steps to protect themselves against investment fraud. The regulator says Canadians lose over $5 billion to fraud annually.
The first step to avoid becoming victim is to ensure that the person or company offering the investment is registered and is in good standing with provincial regulators, and that the investment product is legal.
The OSC advises investors to read the prospectus, which provides information that is essential in making a decision to buy an investment product. It reminds investors that the prospectus must be filed with securities regulators and is publicly available on The System for Electronic Document Analysis and Retrieval at www.sedar.com.
The OSC has compiled list of common indicators of investment fraud, including:
- Unrealistic promises of spectacular returns on investments, higher than current bank rates, with little or no risk;
- Enticing offers of tax avoidance through offshore investment opportunities;
- Ads or seminars promoting unregistered investments; and
High-pressure sales tactics e.g. claims that the offer will expire shortly or that you are one of the lucky few to be invited to invest.
Investors must learn to safeguard themselves from fraud says the OSC, because legal action is often the only way to recover the money after it’s gone.
“Investors should be aware that a court case can be a difficult and time-consuming process and offers no guarantee of recouping losses,” notes Perry Quinton, manager of investor communications at the OSC. “Education is the key to protecting your money in the first place.”
More information on frauds and scams is available on www.investorED.ca.