Become rich. Financial freedom guaranteed. Do these promises sound familiar? If you are invited to an investment seminar that makes such promises to increase your wealth, consider the following tips. These “wealth enhancement” seminars, while sometimes marketed as free, may require payment to register and are likely to include substantial “membership” fees once you attend and participate. Once a member, you may then be given access to questionable information on how to succeed in business or how to profit from investments and projects involving anything from precious metals to consumer debt reduction strategies, environmental technologies or international mutual funds.
Seminar presenters are often careful to stress that they are only selling memberships into their organization and not selling securities, because that would mean they would need to be registered with the ASC. However, as attendees or members get further involved, they may indeed be encouraged to purchase securities. This situation happened to more than 100 Alberta investors who lost millions. In September 2010, the ASC sanctioned Kustom Design Financial, Kustom Design Group and Hightide Management for luring investors to financial education seminars where they illegally offered and sold investments to attendees. In other cases potential investors are told their money will be invested in a specific investment or company when in reality it is being invested towards other business ventures not disclosed – often at a significant loss. Before you go to a wealth enhancement seminar, consider these red flags:
- invitations to attend seminars in major urban centres, with a significant attendance fee
- marketing that plays on your desire to get your family out of financial debt
- investments that promise high rates of return with little or no risk
- individuals who are offering the opportunity describe themselves as having impressive credentials and designations that you are not able to verify (e.g. “wealth enhancement expert”)
- opportunities that are promoted through word of mouth by referrals of close friends or family (who may or may not have completed their own background check on the opportunity)
Help protect yourself by taking these steps before you hand over any money:
- Do your own research (such as an internet search) on the company and/or individual(s) to see if they used any other company or personal names previously, and to look for indications of past problems such as other investors losing money or company bankruptcies (e.g. do a land titles or corporate registries search www.servicealberta.ca/Registries or contact the Office of the Superintendent of Bankruptcy in Canada www.ic.gc.ca/eic/site/bsf-osb.nsf/eng).
- If credentials are listed or promoted, such as designations or completion of courses or training, check where they got these credentials and what was required to acquire them.
- Ask questions about the investment and get your information in writing. Consult with someone with business knowledge that is not involved in the deal so you can get a second opinion.
- If the opportunity sounds suspicious, consider not going to any of their seminars as once you are there, it is difficult to say no to what is being offered due to high pressure sales tactics.
If you or someone you know has been approached with an investment offer sounding similar to what’s been described above, please contact ASC Public Inquiries at 1-877-355-4488. Comment on this blog... | About this Blog We’ve created this blog to present you with answers to some of the more popular questions we receive from investors. We'll have different subject matter experts blogging about what they know best and we'll update it as new blogs arise. We hope you'll find it interesting and helpful. Today's Blogger Hi, I’m Lorinda Brinton, senior advisor for Investor Education at the ASC. During the last five and a half years I’ve been working to get you the information you need when making your investing decisions. We have many resources throughout the site to help you be more informed and better protect your money. Check them out – I’m sure you’ll discover some tools or information that will be useful. Here are some links I think you’ll find helpful: Ask your question If you have a question you would like to see answered on this page, email them to questions@asc.ca. We may not use every question we receive but will concentrate on areas from which we receive the most inquiries. If you have a question related directly to your own situation, please contact ASC inquiries using our toll free number (1-877-355-4488) or email inquiries@asc.ca. If you have a complaint, email complaints@asc.ca or call 403-355-3888.
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