You ASC'd Blog
We’ve created this blog to present you with answers to some of the more common 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 blog topics arise. We hope you'll find it interesting and helpful.
The New Year has arrived and while health and fitness resolutions easily come to mind, have you considered how financially fit you are? To some, it might come as a surprise that undue stress from your finances can have a negative impact on your health and wellbeing. The good news? It doesn’t have to! Check out our tips to help set out your 2019 financial goals on the right foot!
1. Review and refresh. Blue Monday gets its name for a reason. The holiday cheer has worn off, you’re back to work and your first post-holiday credit card statements have arrived. If you’ve blown your budget, don’t worry. The New Year is a fresh start and you can take this opportunity to assess your budget, revise your financial goals and create a plan to repay any debt. CheckFirst offers a wide variety of calculators, quizzes and worksheets that can help you evaluate and set your 2019 budget no matter where you’re starting.
2. Don’t let new goals overwhelm you. If you’re setting out with new investment goals in 2019, don’t let them consume you. It can be easy to get lost in the sea of investment options, unfamiliar language and complex mathematical equations by yourself. If you’re looking for a crash course in investing that’s taught in plain language and easy to digest, consider registering for an Investing 101 course offered in Calgary or Edmonton by Chinook Learning Services and Metro Continuing Education, respectively. If you prefer learning at home, our free online courses hosted by financial planning guru Kelley Keehn might be for you.
3. Find the right fit. The root cause of financial stress can often be linked to a lack of information. If you aren’t working with a financial advisor, consider working with one. A relationship with the right financial advisor can help make you a more informed investor who is comfortable with their investment decisions. Before you work with anyone new, always be sure to check their registration and ask key questions to make sure they are right for you. With few exceptions, securities industry professionals are required to be registered with the securities regulator in the jurisdiction where they conduct business. Registration helps protect investors because securities regulators will only register firms and individuals if they are properly qualified, helping you to rest easy.
4. Break up with bad relationships. Another big source of stress can stem from distrust in your investments or financial advisors. This year, once you’ve evaluated your finances and goals, don’t be afraid to end relationships that aren’t working for you. If an investment, financial partner or financial advisor isn’t providing what you need to feel comfortable and successful, don’t be afraid to speak up. Remember, they’re supposed to work for you.
5. Nothing is set in stone. While goals can help you clearly define where you want to be, the path to get there isn’t cut and dried. Don’t be afraid to pivot on your financial plan, or change direction throughout the course of 2019 as needed. Your finances should be arranged so as to help you achieve your goals (within reason). If something is bringing you undue stress, now is the time to change it!
As you embark on your financial journey in 2019 don’t forget to visit CheckFirst.ca for free, unbiased resources. The ASC’s CheckFirst team is popping up in Red Deer on Saturday, January 19 at the Healthy Living Expo in Westerner Park. If you attend, don’t forget to come by and speak with us – we’d love to see you!
To help Albertans invest their hard-earned money wisely, we have identified the top five risks in 2019 based on information gathered by our Enforcement team.
• A Wolf in Sheep’s Clothing? The number of complaints relating to private, high-risk investments promising high returns that are marketed as low-risk are on the rise in Alberta. Before you’re tempted to believe a “too good to be true” offer, remember the relationship between risk versus reward – generally, the higher the potential reward, the higher the risk that you could lose some or all of your investment. These schemes are often marketed as “how the wealthy make their money,” or an “exclusive opportunity” – which are simply high-pressure sales tactics.
• My friends can’t be wrong. Affinity fraud continues to be an issue in many jurisdictions around the world, including Alberta. With affinity fraud, victims are introduced to scams by someone they trust – family, friends or co-workers –and invest based on their recommendation. In Alberta, religious affiliation is currently a common link between victim and perpetrator. Research and checking registration before investing are important steps to avoid becoming a victim.
• Psst -- I know something no one else does! This could be a high-pressure sales tactic used by scam artists, or it could be illegal insider trading. Illegal insider trading is when important, non-public information about a company is used to profit from trading in the company’s stock. It can be done by anyone including company executives or employees, their friends and relatives, or even an average person on the street – if material, non-public information is used. In Alberta, employees who suspect insider trading or other securities law violations by their employer can now act as a “whistleblower.” The ASC’s new whistleblower program enables individuals to provide critical information about securities misconduct and without fear of reprisal.
• Don’t miss this new opportunity! The latest trends can often offer exciting investment opportunities, but they also attract scam artists who build schemes around the latest trends because there is limited information available to vet the opportunity. Our Enforcement division has recently been tracking potential scams related to cannabis and cryptoasset investments. Take your time and make sure you truly understand the investment before handing over your money.
• Trust me, I’m authorized to sell this investment. Did you know that, generally, anyone who offers investment opportunities in Alberta must be registered to do so? Scam artists hope you don’t, so they can continue to profit. Reports of non-registered individuals selling investments are on the rise. Make sure you verify the registration of any advisor or organization using before you invest
Remember -- if it sounds too good to be true, it probably is.
There is a lot to learn about investing beyond just the current risks. Consider brushing up on your financial knowledge by reviewing some of the ASC’s free resources or previous blog posts. If you have a topic you’d like to see us blog about, let us know via social media or our public inquiries office — we’re here and we’re listening. All the best of the New Year, and let us know how we can help!
Red Flags of Fraud
Continuing our series showcasing ASC employees and the roles they play in investor protection, meet Ceilidh McMeekin, Advisor, Investor and Industry Education. She joined us in early 2018 from Toronto, and helps spread the word on how the ASC can assist people to educate and protect themselves from investment fraud.
What drew you to joining the ASC?
My background is heavily rooted in consumer-focused public relations: educating people on the latest and greatest products in the market. While I got to do a lot of fun work selling people ‘things,’ I was hungry for a role where I could help people. So when an opportunity opened up at the ASC, I saw the chance to be a part of a leading organization and help Albertans. Working to protect the public is a uniting front for our employees and gets them up and out of bed in the morning. I’m definitely one of those people!
What is your role on the communications team?
There are two aspects to my role – Investor Education and Industry Education.
Investor Education is one of my favourite parts because it focuses on reaching out and talking to as many Albertans as we can throughout the year – both online and face-to-face at various events throughout the province. We provide them with free and unbiased information to help make informed investment decisions, raise their awareness of the red flags of fraud, and then direct them to our investor-focused website, Checkfirst.ca, which provides a variety of resources to increase their financial literacy. “Knowledge is power,” and the more information people have, the less likely they are to be a victim of a fraudulent scam.
The other piece is Industry Education. There are always new rules and regulations that affect investment and securities professionals, so the ASC holds several events annually to communicate this information. The most exciting and largest is our annual conference, ASC Connect, which is a day-long informative event with amazing speakers.
What makes you passionate about your work at the ASC?
The ability to do good. I’m no longer trying to get people to purchase things that they don’t necessarily need; instead, I’m providing Albertans free resources that help them protect themselves. In addition, I like being proactive. My group reaches out, connect with people, lets them know about the resources available to them, and helps them be in a position of power when it comes to making their financial and investing decisions.
What is your proudest accomplishment at the ASC?
ASC Connect is probably my proudest accomplishment. It’s a big project with many different components so you have to think holistically about the different stakeholders and their needs to ensure they receive good value. Every single member on my team pulled together to help, and this year’s conference couldn’t have been as successful without their assistance. We had over 300 attendees and 100 per cent said they would recommend ASC Connect. Looking forward, we want to continue delivering A-grade content that is timely and informative, not only about past developments and upcoming trends, but tangible information that can be applied right away.
How do you feel you help Albertans?
By increasing people’s awareness of the red flags of fraud and breaking down barriers. Talking about personal finance is often taboo, but the more open discussion we have about it, the more we can help each other. Letting Albertans know about our resources – whether they are an experienced or new investor - may help them learn something new and become empowered to make better investment decisions and protect themselves or their loved ones from investment fraud.
What is the most important thing you want Albertans to remember?
Checkfirst.ca. We pour our energy and talents into this educational resource. It’s here for you. Use it. Share it. And check everything. First and foremost, check your advisor’s registration, and second, focus on learning the red flags of fraud.
The more you learn, the more you know and the better questions you can ask when approached with an investment. Checkfirst provides the tools you need to vet experts and potential investment opportunities to ensure that it’s right for you.
Is there anything else you want to share?
Keep an eye on Checkfirst.ca, and come see us when we’re out on the community. We’re active on social media so if you happen to see that we’re coming to an event near you, please come talk to us. We love to meet new people and share our information.
In October 2018, Canada became one of the first countries in the world to legalize recreational cannabis. Whether you agree with it or not, cannabis is now publicly available for Canadians for both medicinal and recreational use.
Many Canadians are tempted to invest in “the next big thing” – in this case, cannabis companies. Perhaps you’ve thought about this too?
Hold on – it’s time for sober thought. Before you jump on board, make sure that you thoroughly do your homework. It’s important to research any investment, although it’s even more important critical when considering investing in emerging industries. These companies haven’t had the test of time to prove themselves and not all companies are equal.
One big concern is the level of transparency and disclosure of this emerging industry. In October, the Canadian Securities Administrators published a review of 70 reporting cannabis issuers’ continuous disclosure, and highlighted common deficiencies and best practices. The review showed that quality of cannabis companies’ disclosure needed to be improved, and they encouraged issuers to use the review as a guide for improvements.
Specifically, issuers in this emerging market often did not provide sufficient information for an investor to understand the company’s financial performance, or risks to their operations (particularly when operations were in the U.S.) including production estimates, assumptions and expectations.
When you’re evaluating a potential marijuana company investment, make sure you consider the following:
- No guarantee of success: Despite the rapidly growing number of companies in the sector, there remains no guarantee that their businesses will be profitable now or in the future. Many cannabis companies are speculating about their success on future distribution and companies’ forecasts of success may only be hopeful speculation.
- Government and legal considerations: Even with the legal regulations now complete, there may still be changes to the laws regarding where cannabis can be sold and if it can be advertised – any future changes may ultimately decrease the value of an investment.
- Pricing and taxation: Government-mandated pricing and taxation on cannabis products may also pose a risk to the success of the legal cannabis industry. Cannabis products, especially those intended for recreational use, are generally priced above the black market. In this fast-evolving situation, it’s unclear that legitimate companies growing and selling the products will be able to sell enough product to make a profit.
- Investing in American companies: While the sale and distribution of cannabis is legal in some states, it is still illegal under U.S. federal law. Should the federal authorities choose to enforce the law, it could put investors’ money at risk.
The cannabis industry has generated a great deal of interest among investors with the expectation of quick growth. However, it’s important to remember that these investments can be highly speculative and often have lofty valuations based upon expectations of future success, rather than current performance. As a result, investors risk paying an inflated price for an investment that may lose its value.
And, in certain cases, there’s no business behind the investment at all; scam artists are known to try to disguise their schemes and fraud behind a glittery veil of the “next big thing.”
So before you get swept up in the excitement and ‘high’ of the cannabis industry, research the investment opportunity, determine that it is legitimate, evaluate the risks, and consider how the investment will meet your financial goals. As we always say – Check first!
Checkfirst.ca/emerging trends/the cannabis industry
Red Flags of Investment Fraud
Recognizing and Avoiding Scams
CSA Staff Notice 51-357: Staff Review of Reporting Issuers in the Cannabis Industry
Investing in the Cannabis Industry (OSC)
In the second blog of our series showcasing the people at the ASC and the roles they play in investor protection, we spoke with Janet McCready, Team Lead, Litigation, about herself and her role at the ASC.
What led you to become a lawyer for the ASC?
I actually did a degree in Zoology and worked at the Calgary Zoo talking about the pandas in 1988. However, there weren’t many full time opportunities in Zoology, so I started considering law as it was an area I had interest in. After I received my law degree from Dalhousie University in Halifax, N.S., I worked in different roles for a few years, ending up at a small litigation firm. After 15 years in practice I was ready for a change, so when a friend suggested that I apply to the ASC, I did, and it was such a great decision!
What gets you up and into work every morning?
In addition to going after the bad guys, it’s refreshing to work with people who are so passionate about public service. Investors who have been the victim of fraud don’t usually get their investment back as the money is gone. That said, it’s very satisfying and motivating to let fraudsters know they can’t get away with it – and stop them from taking from others. It also sends a message and hopefully educates more investors. The denial of some who are accused of misconduct and their inability to take responsibility for their actions drives me crazy! I’m glad we have a strong regulatory system so if people want to invest money, they can do it with their eyes open and with full disclosure. Their money is their money and nobody else is entitled to it.
What is your team responsible for?
Our primary role is to take allegations to a hearing after an investigation has been conducted. As Staff counsel, we appear before a panel of the Commission and introduce documents and witness testimony in support of the allegations made. We also consult with other ASC teams when there’s a legal issue arising during an ongoing investigation. This can mean applying for early relief, such as an Interim Cease Trade Order (ICTO) to temporarily pause trading or a Freeze Order to preserve assets while further investigations continue, providing recommendations, preparing for hearings, court applications and appeals.
What is your proudest accomplishment at the ASC?
Soon after I started, I helped work on a case where fraud was discovered early and there was over a million dollars left in the fraudster’s bank account. We obtained a receivership order from the court, worked with the receiver, and when it was settled, some of the investors actually got some money back – up to 50 cents on every dollar they invested. While that doesn’t fully pay back all they’ve lost financially or emotionally, it is a help. Overall, the dedication of the team and collaboration with others allowed us to minimize the financial harms the victims suffered.
How do you feel you help Albertans?
I would say through information and deterrence – shining a light on what’s going on. Once a matter goes to a hearing, it’s open to the public. Sometimes investors come to the hearings so they gain information this way, as well as through various ASC communications. I hope this information helps people become more skeptical and to not simply trust what they are told. Do your homework. Call the ASC or visit our website if you have any questions or concerns. Before investing, check your advisor’s registration. There are resources available to help ensure that you’re doing all you can to protect your money.
Research shows that one-in-four Albertans believe that they have been approached with a possible fraudulent investment. With new technologies and industries emerging constantly, investment opportunities are everywhere, but with that comes financial fraudsters looking to take advantage.
One of the best ways for Albertans to protect themselves is by improving their financial literacy. Here at the ASC, we work to provide a wide variety of unbiased, informative educational resources that Albertans can access on-demand to fill whatever informational gaps they might have. Because as the old saying goes, “knowledge is power.”
While it is important to have a firm grasp of financial terminology, we also know that there’s a laundry-list of other activities (like taking out the garbage or raking the leaves) that we would rather do then to study it. Recognizing this, the ASC is launching a fun and engaging campaign and contest to help Albertans brush up on their knowledge during Financial Literacy Month.
Leveraging our informative videos featuring personal finance expert Kelley Keehn, Albertans can participate in a contest to determine how financially ‘Keehn’ they are. The contest will run via Facebook and Instagram advertisements – so keep your eyes peeled! – to participate all you need to do is fill in a missing “blank” from a featured Kelly Keehn video clip, and follow the contest rules and regulations. All participants who provide an answer on Facebook will be entered into a draw for a chance to win a Sonos One – Voice Controlled Smart Speaker®. Click here to learn more about the contest and how to participate.
For more helpful information and resources that can help you increase your financial literacy, we recommend visiting CheckFirst.ca. The website has a wealth of information including a glossary of common terms related to financial literacy, six Investing 101 videos with Kelley Keehn and so much more!
If there’s one key takeaway from Financial Literacy month, it’s to remember that you can improve your financial literacy, and by doing so, help protect yourself and your hard-earned money from investment fraud. The ASC is here to help, offering free, unbiased resources for all Albertans to increase their financial knowledge and make investment decisions. While we can’t tell you exactly what to do, we can help provide the information you need to make a wise investment.
How financially ‘Keehn’ are you?
The air has turned crisper and the leaves are changing colour. You spent the end of summer getting the kids ready for school – you checked off the supplies on their list, prepared lunches, packed bags, signed them up for extra curricular activities, and dropped them off.
Their scholastic journey has begun and they are prepared for future success. Or are they? When planning for their school needs, did you consider what happens when they graduate high school? Do you have a plan to help finance post-secondary education? And is this money secure and safe?
Costs for post-secondary education – universities, trade schools, colleges – are rising every year. One way to help your kids out for their future education needs is through a Registered Education Savings Plan (RESP). If you don’t already, September is a good time to consider investing in one as you prepare them for school and their future.
Why should I consider a RESP for my child?
Contributing to a RESP can make a big difference in terms of how much it will cost you and your child in the future for education. RESPs have many benefits specifically geared to students that other savings plans may not. These include:
- Affiliated government grants. You can apply to the federal and provincial government for grant and tax incentive programs, which will match a portion of the money saved in a RESP.
- Tax-deferred growth. You can contribute up to $50,000 per child to a RESP without any taxes payable on the money earned until it is used. When the money is withdrawn, income earned is taxed at the student’s tax rate – which could be minimal as most students have little or no income.
In addition, by starting early in your child’s life to contribute to an RESP, the more that can be saved due to the impact of compounding interest. For example, you can earn an additional $20,000 by beginning contributions when your child is age 1 versus age 10*.
Making safe RESP investments
You’ve decided to set up an RESP for your child. Great! Now how to do it…
Start by talking to your financial advisor or financial institution. Most banks, credit unions, mutual fund companies, investment dealers and scholarship plan dealers offer RESPs. They can help you plan for future needs and pick out the type of investments that are appropriate for your situation. When considering a provider, ask:
- What fees am I expected to pay, and when?
- When and how much do I have to contribute?
- What kind of investments can I put in the RESP and what are the risks?
- When and how do we receive payments?
- What happens if my child doesn’t go on to further education?
- What if I change my mind?
A handy RESP Checklist can be found on the ASC website that discusses fees, investment risks, and researching RESP providers. The Government of Canada also provides useful information on the program and their grants.
As with any investment, make sure you follow the ‘Check. Protect. Invest’ steps on the ASC’s CheckFirst website to protect yourself and your child’s future from potential investment fraud. Check that the individual or firm is registered to sell securities in Alberta, and if there has been any enforcement history with them. Protect yourself by asking the right questions about any potential investment and watching for red flags of potential fraud. Once you’re confident the investment is right for you and your child, proceed with the final step and…
…invest. Just like when you held their hand on their first day of school, your investment in an RESP will continue to protect and help them as they step out into the world on their own.
*Assumes $200 monthly contribution and a 6% rate of return compounded annually until the age of 18
Red Flags of Investment Fraud
Canada Revenue Agency
The ASC is the regulatory agency responsible for administering the province’s securities laws and is entrusted with fostering a fair and efficient capital market in Alberta while protecting investors. But have you ever wondered who are the people at the ASC, and the roles they play in investor protection? To help answer that question, recently caught up with Dolores Ivany-Fagan, a dedicated 18-year ASC employee currently serving as an Assessment Officer, to learn more about her role and her passion for helping Albertans.
What does your team do the for the ASC?
The assessment team is the first point of contact for the public when they have a concern about an investment they’ve made. Here, we start by receiving complaints from investors and begin the process to determine if it’s an issue that the ASC can assist with. Things move forward from there.
What is your role on the assessment team?
I listen to complaints, discuss the issue with the investor and then begin the overall review process. I read everything potentially related to the situation, gather the individual’s information, do background searches and then combine it all to make an assessment. From there, I make a recommendation as to whether the issue needs to be investigated or redirected to a more appropriate organization.
Why are you passionate about your role at the ASC?
I don’t like the fact that there are dishonest, conniving, and deceitful people who try to take other people’s money for improper purposes. When you’re telling someone you’re going to take their money and invest it, do that. Don’t take it to your bank account and do with it what you please. We all know how hard it is to earn money.
What are your biggest accomplishments?
Two cases that come to mind are ‘WealthStreet’ and ‘Shire’. I had a bad feeling about the two complaints that I couldn’t shake. I searched and found information that helped support moving them forward as cases of fraud. As a result, we were able to take enforcement action on both of them.
What threats do you see right now for Albertans?
A big area of concern is real estate investments – people believe that when their name is on a lease or mortgage agreement they own part of the building. They don’t realize that they are probably in second or third positions of ownership, which can cause issues in terms of getting their money back if something goes wrong. The way offering memorandums are written can be confusing; they are often quite large documents and written in complex legal terms that not everyone understands. It’s so important to understand what you’re signing.
What is your best advice for Albertans who are looking to make solid investments?
Please make sure you check the registration status of your advisor and the registration status of the company. Don’t be fooled by high pressure tactics and do some research. People will spend six months researching a new vehicle, go to the dealership and haggle for $500. Do the same for your investments – that is going to make a lot more of a difference in your future financial security than a car. If, after that, you have a level of confidence that the investment is sound and a good fit for your financial goals, only then go through with it.
The dog days of summer are here, allowing time to relax, rejuvenate and reflect on life. Maybe you’d like to learn something new. Or you’ve picked up a motivational book you wanted to read. Maybe you’ve seen a Ted Talk that got you thinking. Maybe you’ve signed up for a self-help seminar or presentation from a visiting inspirational speaker – perhaps a popular talk show host, an international celebrity or even someone you saw on social media.
It’s empowering to hear how someone overcame adversity or became successful. You feel revved up, inspired, excited – ready to make changes to your life. While you’re at this type of seminar, you’ll likely see other presenters or exhibitors encouraging attendees to learn about whatever ‘expert’ self-improvement advice they have – how to improve your self expression, be a more aware person or improve your financial stability.
Hard stop. You know the headline speaker is genuine/authentic and the event legitimate, but that doesn’t mean that the other ‘expert’ speakers or presenters have been thoroughly vetted. It’s time to think critically – especially if one of the lesser-known speakers is promoting their own wealth management system, selling their books and/or offering up a discounted rate to their own investment sessions, software, or investment opportunity.
Before you sign up with someone who promises to “change your life” financially, be wary:
- Don’t assume that the individual promoting a financial opportunity is legitimate
- Be skeptical of financial promises, especially concerning ‘guaranteed high returns and no risk’ – investments that tout this are scams.
- Don’t feel pressured to ‘buy today’ or believe threats that you’ll ‘miss out’
- Ask yourself if the proposed investment fits with where you are financially in life
- Watch out for the red flags of investment fraud
- Check if they are registered to sell securities or investments and if they’ve ever had any disciplinary action taken against them in the past
Armed with these tips, go enjoy these events and gain new knowledge, ways of thinking and skills to help improve your life. Just make sure that any investment opportunities being presented are legitimate and fit with your future goals before you get swept up in the excitement and feelings of empowerment.
Red Flags of Investment Fraud
Recognizing and Avoiding Scams
The number of seniors in Alberta is growing, and Albertans aged 55 and over report being approached with potentially fraudulent investments more often than any other age group. Recognizing this, the ASC ran a strategic month-long campaign to connect directly with Alberta’s senior community.
The campaign was comprised of several elements to increase and expand our reach beyond seniors to include caregivers, family members and the general public, as well as to expand outside major cities to secondary and rural markets.
As part of the campaign, the annual Investor Index survey was completed that included a new oversample of Albertans 55 years of age and over. Key findings from the survey were leveraged throughout the campaign to drive Albertans to the CheckFirst.ca website.
We also revised the seniors page on CheckFirst.ca to better direct people to our free, unbiased resources and new items related to the campaign, including a revised ‘How Safe is Your Nest Egg’ quiz/contest and “Spot and stop senior investment fraud” brochure. A total of 678 people took the quiz – three of which are receiving a prize of a $50 Visa gift certificate!
Our CheckFirst booth appeared at events in St. Paul, Alberta and, once again, for Grandparents’ Weekend at Calaway Park. At both events, we highlighted the resources we have available to help senior Albertans increase their financial literacy and avoid investment fraud. In addition, we reached out to seniors associations and community groups in both urban and rural centres, providing details of the online quiz/contest, the CheckFirst.ca/seniors web page and other seniors resources. This represents a key step to building stronger relationships with many small communities across Alberta.
Key to extending our reach to Albertans is working with media. Our initiatives were covered in over 45 urban and rural publications, including two television interviews (CTV and Global) and CBC story related to our Calaway Park pop-up and senior fraud. In addition to driving significant interest to the CheckFirst.ca website, we reached over 1.5 million Albertans through media coverage alone in June.
Overall, we’re pleased with the number of Albertans we were able to reach– either in person or through other means – and look forward to continuing our work with the senior community throughout the year!
Spot and Stop Senior Investment Fraud