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The national registration search contains the names of all individuals and firms who are registered to sell securities in Canada, with the exception of those registered solely with the Ontario Securities Commision (OSC).

ASC ExternalSite > Investors > Investor Resources > You ASC'd Blog > Posts > Know the signs of affinity fraud

June 25
Know the signs of affinity fraud

Affinity_Fraud Seniors

As an informed investor, you research investment opportunities before taking the leap with your hard-earned funds. You utilize online resources and tools, and review materials provided by your financial institution or unbiased third parties like the Alberta Securities Commission.

You also might take advice from the people you trust most like a family friend, fellow congregation member or neighbour. Unfortunately, while none of us like to think about it, investment fraud is sometimes perpetrated by people we know and trust. When scam artists prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups, it’s called affinity fraud, and it happens more often than you might suspect.

There are a number of things you can do to determine if the investment being offered through a personal relationship is real or not. Before you consider investing in something, make sure you review the following checklist in order to help you spot affinity fraud:

  • Be suspicious of investments described as ‘exclusive’ or only offered to particular groups (i.e. congregation members or club members only).
  • Watch out for advisors who exploit a personal connection: while you might know the advisor from your local religious group or community center, be sure to research backgrounds and credentials regardless before making investments.
  • Beware of referrals: while your friends might be singing the advisor’s praises, they might not have conducted background checks and could have been selected by the scam artists as early influencers, who then spread the word about the scheme.
  • Don’t be hooked by spectacular returns and low risk: if it sounds too good to be true, it likely is. Make sure you get a prospectus, financial statements or other written information about the opportunity and review it carefully.
  • Consult a knowledgeable third party not involved in the investment such as a lawyer, banker, accountant or registered financial advisor before deciding to participate in an investment.
  • Remember that the most important step in ensuring your protection in any investment is to first check your advisor’s registration, and then consider the above items. Don’t let someone exploit your trust or friendship for their own financial gain.

Helpful links

CheckFirst.ca
Spot and Stop Senior Investment Fraud

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