Investors should beware of investment schemes being marketed under the name of either the Alpha Project or the Flat Electronic Data Interchange, the Ontario Securities Commission says.

“Investors are being solicited to invest in a product that is not registered under the Ontario Securities Act, by people who may not be registered to sell securities in Ontario, in contravention of the Ontario Securities Act,” the OSC said.

On Thursday, the OSC issued a temporary cease trade order against Brian Anderson, Leslie Brown, Douglas Brown, David Sloan and FEDI directing them to cease trading in certain investments defined by the order. The order also prohibits the Respondents from providing certain documents to the public, which are attached to the temporary order.

The order expires on June 20, unless further extended by order of the commission.

The commission said the schemes supposedly involve investment in a desk or a seat in FEDI, which is claimed to be “equivalent to owning a seat on the Chicago Mercantile (Commodity) Exchange or a seat on the New York City Stock Exchange”. Potential investors are asked to sign confidentiality agreements before they are given any information about the purported investment schemes and are then pressured to invest US$125,000 on an urgent basis. Under the schemes, investors’ money is said to be sent and managed offshore.

“The schemes appears to incorporate many elements about which investors should be wary, including confidentiality agreements, funds being sent offshore, an ill-defined ownership structure, mysterious foreign millionaires, very high returns, guarantees of no risk and assurances of full insurance of funds, in this case by organizations that do not actually insure investments.

The OSC said investors in Toronto and surrounding areas, Ottawa, Sarnia, Calgary, Vancouver, Victoria, and several jurisdictions in the U.S., including Michigan, may have attended information sessions about these schemes.

“People considering investing in these schemes are strongly encouraged to consult a registered investment advisor before investing. Anyone with further information or who would wish to file a complaint about these schemes is encouraged to contact the Ontario Securities Commission at 416-593-8314 or toll free at 1-877-785-1555.”