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 law is a complex thing. There are civil, criminal and administrative branches. There are also practice areas that may seem similar but are completely different (e.g. corporate law, tax law, securities law) and various regulatory organizations. If you have an issue, or think you’ve been scammed, how do you know who to contact? Understandably, it can be confusing, so in honour of Law Day, we wanted to offer more clarity around securities law, and what exactly the ASC does and does not do.
Who is the ASC?
The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted with fostering a fair and efficient capital market in Alberta and with protecting investors.
The Securities Act (Alberta) is the legislation designed to ensure that Alberta’s capital market operates fairly and efficiently for participants and that investors have timely, accurate information on which to base investment decisions. It also ensures that those who sell securities in Alberta are registered and that they conduct themselves according to applicable laws and professional standards.
What is a security, actually?
Generally speaking, “securities” are issued in exchange for investing in a business. These kinds of transactions must comply with securities laws. Loans, promissory notes, shares, and units are just a few of the examples of things that are considered securities. In a nutshell, if you give someone money and expect to make a profit from their efforts or those of a third party, it’s probably a security and they’ll need to comply with securities laws.
In addition, anyone in the business of helping to find investors for persons or companies needing funding or advising people about investing may also be subject to securities laws. They may need to be registered, for example, as an investment dealer, adviser or an exempt market dealer – unless they are relying on an exemption from the registration requirement.
The bottom line is, if people are being asked to make a loan or other investment, securities laws need to be followed.
What do people mistakenly contact the ASC about?
The ASC does not administer any laws other than those under the Securities Act (Alberta), but we often receive inquiries regarding matters don’t fall under our jurisdiction. While we’re always happy to point people in the right direction, ultimately, you’ll need to connect with the appropriate organization to address questions or complaints that aren’t securities-related. Here are some issues that the ASC is often approached in regards to, and where they should be directed instead.
There are multiple variations on this scam:
A call purportedly from the Canada Revenue
Agency (CRA) saying you owe money, and threating to take severe action if it is
not paid immediately.
A communication purportedly from the CRA requesting
personal information (social insurance number, credit card number, bank account
number), or urging you to visit a (fake) CRA website to input this information,
so you can receive a tax refund.
Canadian Anti-Fraud Centre
A job advertisement posted on Kijiji or other internet
site states that the applicant has to supply money to be considered.
Any questions related to segregated funds
The insurance representative who sold you the fund
Alberta Insurance Council (AIC) 403-233-2929
An email or text from a bank (RBC, CIBC, Scotia, etc.) saying your account is locked
Anything related to the licensing of security
Solicitor General – Government of Alberta
Any issues related to the purchasing of goods or
services, which are not securities/investments on Kijiji, Craigslist, EBay or
other online sale sites
Help Desk/Fraud Desk for the specific website on which
you made the transaction; contact information will be on each site
Anything related to Olympia Trust or other trust
companies in Alberta
Disputes regarding fees, accounts, etc.
Superintendent of Financial Institutions Alberta
If you do have a question related to securities and investments, contact our Public Inquiries Office toll-free at 1-877-355-0585 or via email at firstname.lastname@example.org. Happy Law Day!
The Canadian Bar Association
Law Day Alberta
The ASC just wrapped-up another jam-packed Fraud Prevention Month. The theme of our 2018 online campaign was ‘The F-Word,’ a humorous way to demonstrate that talking about finances does not have to be a negative experience. We encouraged Albertans to visit our newly re-launched consumer website, CheckFirst.ca, home to a brand-new series of Investor 101 videos as well as other free tools to learn about investing. These resources can help Albertans arm themselves against investment scams by learning key financial concepts and becoming aware of some of the red flags of fraud.
We also took to television screens across the province via our Public Service Announcement on CTV. Our objective was to remind Albertans that the ASC is here to help them learn ways to recognize and avoid investment fraud. If you didn’t see our PSAs during their run in during February and March, check them out
Once again, we took the CheckFirst Café out to tradeshows to engage directly with public. This year, we set up shop at the Calgary Outdoor Adventure and Travel show and the Edmonton Boat and Sportsmen’s Show, where we served coffee and investor education tips to show-goers. Over the course of both shows, we connected with approximately 6,000 Albertans, reminding them to research and check registration before investing and to educate themselves on the red flags of investment fraud.
Finally, as a way to test what Albertans learned through the month, on March 28 we hosted a Facebook live video event with financial expert Kelley Keehn. The event, called ‘Fact or Fraud,’ was a jeopardy-style quiz show with a focus on finances.
Thanks to all Albertans who connected with us, whether it was in-person or online — we hope we helped you improve your financial literacy. As always, when it come’s to investing, remember to CheckFirst.
Investment opportunities can be as unique as individuals. Indeed, what’s perfect for one person may not work at all for another. There are different types of investments available, and numerous individuals and firms offering them. Each will offer different opportunities, have different characteristics that make them unique. It’s important to find the one that is right for you, and to check first before choosing to work with any financial professional or firm.* Once you have, however, some rights that you have as an investor are consistent across Canada. We’re listing them today in honour of World Consumer Rights Day.
*Not all investments must be sold by an individual or firm registered under the Securities Act (Alberta) - for example, segregated funds or GICs. However, generally anyone, regardless of what title they use, who is in the business of selling or advising on an investment that is a security (for example a mutual fund, share, stock, bond) must be registered under the Securities Act (Alberta)), and for the purposes of this blog, we are referring to individuals and firms who are registered.
Know your rights:
When opening a new investment account – A financial professional is required to provide a description of the following: the type of account you are opening; the services offered (not all registered firms and individuals can offer all types of services or products); the risks you should consider when making an investment decision; any potential conflicts of interest; the types of charges you will pay in relation to your account; any compensation paid to them by third parties in relation to your account; and the content and frequency of reporting you will receive in relation to your account. This information must be provided to you before you are provided with any services. If, at any time during which you hold the account, this information changes, the financial professional must provide you with notice of any applicable changes.
When making a transaction – With certain types of accounts, the following information must be disclosed to you even before a security can be bought or sold on your behalf: any charges you will have to pay for the purchase or sale; whether or not you will be required to pay a deferred sales charge on any subsequent sale of the security and the fees that will apply; and whether the financial professional will receive any trailing commissions for the transaction. With certain types of securities, including mutual funds, investors have up to 48 hours after agreeing to a purchase to change their minds and cancel the transaction. (Note that this is not applicable to all investment transactions, particularly those on an exchange.)
On an ongoing basis – In addition to account statements and trade confirmations, many financial professionals are required to provide you an Investment Performance Report and an Annual Charges and Compensation Report on a yearly basis. The Investment Performance Report should list the market value of your investments as at the beginning and end of the 12-month period covered by the report; a summary of the change in value of your account; and the rates of return of your account over time. The Annual Charges and Compensation Report should list the compensation that the financial professional received directly and indirectly in relation to you account. This includes charges that you paid directly to them and compensation that they received from third parties.
When investing in a mutual fund – There is a document that is specific to mutual funds that must be provided to all potential investors. Known as “Fund Facts,” it lists: the costs of buying, owning and selling the fund; sales charge information (illustrating the differences if multiple series of the fund exist); fund expenses (investors don’t pay these directly, but they affect you because they reduce the fund’s returns); any other fee information; and other information about the fund including who to contact, and how to get a copy of the simplified prospectus or other disclosure documents about the fund.
Remember, it’s our job at the Alberta Securities Commission to regulate people and companies offering investments – so contact our Public Inquiries Office toll-free at 1-877-355-0585 or via email at email@example.com with concerns you may have about an investment you’re considering. If you have a consumer issue or question that is not investment-related, it would be best directed to the Government of Canada’s Office of Consumer Affairs.
CSA Tools for the Client-Adviser Relationship
Another jam-packed Fraud Prevention Month is upon us, with a focus this year on improving Albertans’ financial literacy as a means to help them avoid investment scams.
Early this month we released the results of on online survey we commissioned that uncovered some of the negative and uncomfortable feelings that Albertans have related to their finances. In fact, when asked Albertans how they would rate being tested on their financial literacy to other common fears, their view is that it’s comparable to swimming with sharks or presenting in front of a large audience. These are big fears!
That’s why during the month of March we’re encouraging Albertans to increase their financial literacy. We’re doing so via an online campaign that demonstrates that learning about ‘The F-Word’ – in this case, finances – does not have to be a negative experience. We’re encouraging Albertans to visit our newly re-launched consumer website, CheckFirst.ca, which hosts a series of Investor 101 videos as well as other free tools to learn about investing. These resources can help Albertans arm themselves against investment scams by learning key financial concepts and becoming aware of some of the red flags of investment fraud. As a way to test what Albertans have learned through the month, on March 28 we’ll be hosting a Facebook live video event with financial expert Kelley Keehn.
Our investor education team will also be popping up at tradeshows in Calgary and Edmonton to serve coffee and investor education tips to show-goers. We’ll be connecting with Albertans at the Edmonton Boat and Sportsman show from March 15 – 18 and the Calgary Outdoor Adventure show from March 24 -25 to chat about the importance of researching and checking registration before investing.
What’s new on Checkfirst.ca?
We’ve have an updated Investor Protection section, with information to help Albertans learn ways to recognize and avoid investment fraud. You’ll also find an Emerging Trends section, which includes information on topics such as cryptocurrencies and crowdfunding.
To support investor protection, we’ve also added a Financial Literacy section to help visitors learn key investing concepts (and more) to help them make safe and suitable investment decisions.
Our Educational Videos section includes brand new financial literacy videos featuring personal finance expert Kelley Keehn, as well as other informative videos.
We’ve also added a helpful Tools & Calculators section, which includes quizzes, calculators and worksheets to help with financial planning and test your investment knowledge.
Be sure to visit the new and improved checkfirst.ca to discover all that we have to offer to help Albertans make suitable and informed investment decisions, and improve their financial literacy.
2017 was an eventful year in the financial markets, both worldwide and closer to home here in Alberta. While we were dealing with the ongoing economic slump in the oil and gas industry, there were also emerging industries and currencies, political events and natural disasters affecting markets worldwide. We covered a lot of subject matter on our blog in 2017, and had intended to showcase our top five posts. However there was a tie for the fifth and sixth most popular posts, so without further ado — our six most popular You ASC’d blog posts of 2017:
In a tie for fifth/sixth most popular blog posts last year were: Get curious about investing - #ASKASC
This post kicked off our Investor Education Month contest, where individuals were invited to submit their questions about investing and financial literacy. This was a win-win for everyone involved, as we used the questions to help build an FAQ library for our Checkfirst.ca page, participants got their questions answered, and one lucky winner received a smartwatch! To stay up to date on future ASC contest and investor education initiatives, keep reading You ASC’d and follow us on Facebook and Twitter.
And: “Mindful” investing — How are we impacted by investment fraud?
This post, in honour of Mental Health Week, explores the impact that being a victim of investment fraud can have on one’s psychological well-being. The importance of protecting yourself from investment fraud, and seeking help if you have been victimized, is highlighted by the story of an Alberta man who became a victim of binary options fraud.
The fourth: Investing risks in the marijuana industry
With the federal government intending to legalize marijuana, it’s no surprise that there’s a lot of interest in the industry as a potential investment. In this blog, we highlight some particular considerations for those who are interested in this new industry.
The third: Alberta seniors — tips to protect your nest egg
One of a series of posts for seniors in honour of June events such as World Elder Abuse Awareness Day and Grandparents Day, we highlighted tips that, although useful for anyone, are particular applicable to those in or approaching their retirement years.
The second: Lights, camera, fraud! Shining a spotlight on famous investment scams
This post, inspired by the 18th annual Calgary International Film Festival, highlighted two of the most famous frauds of all time — the original Ponzi scheme from which that type of fraud takes its name, and Bre-X Minerals, which, although it started in Alberta, received worldwide attention and was recently used as inspiration for a major motion picture.
And (drumroll please!)….the most popular YouASC’d blog post of the year is:.
Briefing you on bitcoin
Considering that cryptocurrency captured many headlines in financial news in 2017, it’s no surprise that our most popular post this year explained bitcoin. While new developments are ongoing with regards to cryptocurrencies and their regulation, this post offers a good primer including what bitcoin is, and what some of the risks surrounding it are.
There you have it – our top six most popular blog posts of 2017!
While we consider a number of factors when deciding which topics we blog about, from what’s in the news to what initiatives we have on the go, we are always open to hearing what questions you want answered. If you have a topic you’d like to see us blog about, let us know via social media or reach out our via our public inquiries office — we’re here and we’re listening.
Happy New Year –here’s to a well-informed and financially healthy 2018!
ASC Investor Alerts
1. Set a budget and stick to it. December can be a more expensive month than others, due to the holidays and the festivities that come with them. Before you start your holiday spending, create a budget so you know how much you have to spend. And remember, gifts aren’t the only additional item on your budget in December. In addition to gift buying, make sure to budget for other holiday expenditures, such as taxi fares, any travel expenses and that new outfit for the holiday party.
2. Before buying, do your research. As with investments, do your research before buying gifts. Make sure to compare prices between retailers and look for coupons so you don’t overpay. Stay in-the-know about retailer’s sales by subscribing to their email lists or following them on social media.
3. Don’t let feelings of goodwill get the best of you. Scam artists will prey on feelings of goodwill and generosity during the holiday season by encouraging potential victims to donate money to a phony charity or cause. On the flip side, many legitimate charities do require increased generosity from donors during December, so how do you tell which is which? If you’re inclined to donate, be cautious and check out the organization you’re considering before you do. Find out here if a charity is registered in Canada to help you with your donation decisions.
4. Be wary of online shopping. As soon as Cyber Monday hits, the internet is full of holiday sales, enticing consumers with unbelievable deals. While many of these online deals are from legitimate retailers, scam artists may also be luring you onto a spoofed website that is fake. Be sure to check the authenticity of a website before putting your personal information at risk. Learn more about shopping safely online here.
5. If you overspend, tweak your budget to keep it balanced. If you find yourself overspending on the holidays in December, consider cutting back on discretionary items such as lunch at the sandwich shop or paying for parking – make your meals at home and take transit instead. The holidays are also a great time to pick up part-time seasonal employment if you are in need of extra cash.
RCMP Scams and Fraud
Government of Canada,
Get Cyber Safe
CRA Charities Listings
Our team of gurus has been busy over the last month answering the great investing questions Albertans had during our #ASKASC contest. We received over 150 questions on Twitter and Facebook!
Many participants had questions about how to start investing, spotting investment scams, new and developing securities regulations in Alberta and RESPs, TSFAs and RRSP’s. Increasing your financial literacy and educating yourself about investing concepts, whether basic or advanced, is an important step to take towards becoming a more informed, mindful investor.
Congratulations to Tristan Davies, our #ASKASC contest winner who walked away with a brand new smartwatch ! Tristan’s winning question, “What's a good way to teach children about money and investing for their future, including post-secondary?” exemplified the spirit of this contest and our desire to continuously enhance investor knowledge in current and future generations. Check out the answer here.
Thank you to all of the Albertans who participated! Your input helped us develop a robust Q&A page that will help many Albertans educate themselves about investing. Check out the CheckFirst Q&A page, jointly curated by all of our participants of the #ASKASC contest.
Remember, even though the contest is over, our team of experts at the ASC is always available to answer your investing related questions.
Emerging markets like the commercial marijuana industry often attract investors looking to capitalize on a new sector; however, investing in U.S. marijuana companies may expose investors to risk. As business models and laws continue to evolve there is a large amount of uncertainty in this emerging sector, leading to a number of risks that could negatively impact investors.
While all investments come with a certain amount of risk, investment in the marijuana industry exposes investors to different types of risk that can impact their potential return. Some common risks include:
No guarantee of success
Despite the rapidly growing number of companies in the marijuana sector, there remains no guarantee that their businesses are profitable or will be in the future. Many marijuana companies are speculating about their success on future distribution; however, many rules and regulations about distribution and sales are still being established.
Government and legal considerations
Many jurisdictions in which marijuana laws are being considered have yet to establish a framework for how and where products can be sold. There may be restrictions on stores that are permitted to sell marijuana, as well as rules about advertising which could impact a company’s ability to make a profit, thereby reducing the value of the investment.
While the sale and distribution of marijuana is authorized in certain states, it is currently illegal under U.S. federal law. Although this federal law it is not strictly enforced currently, authorities in the U.S. could choose to enforce it at any time, putting the company at risk of prosecution and seizure of assets. Investing in a company that does business in a place where the regulatory and legal frameworks are unclear, or inconsistent, puts investors’ money at risk.
Pricing and taxation
Government-mandated pricing and taxation on marijuana products may also pose a risk to the success of a marijuana company. Marijuana products, especially those intended for recreational use, should be priced below their black market value in order to attract consumers. If the government prices marijuana products too high, or if black market dealers undercut prices of products available in stores, the companies growing and selling the products may not be able to sell enough product to make a profit.
Inflated share prices
The marijuana industry has generated a great deal of interest among investors with the expectation of quick growth. However, these investments can be highly speculative and based upon expectations of future success, rather than current performance. Investors risk paying an inflated price for an investment that may not increase in value.
High operating costs and share dilution
The costs of developing and operating a commercial marijuana company can be considerable as it requires specialized, large-scale facilities and enormous amounts of power and capital to operate. As these high operating costs begin to accumulate, companies may choose to raise capital by issuing additional shares. This issuance comes at the expense of current investors whose percentage ownership decreases proportionally to the number of shares issued, leading to a decrease in investment value.
Before investing in a marijuana company, investors should research the investment opportunity, evaluate the risks, and consider how the investment will meet their financial goals. For more information on investing in U.S. marijuana companies, please visit a recent article published by the Ontario Securities Commission (OSC).
Wondering how to properly research an investment opportunity? Or what the difference is between a TFSA and an RRSP? Chances are, if you have these questions about investing, someone else does too. Here’s another question, have you ever searched a Q&A page on a website and couldn’t find what you were looking for? On CheckFirst.ca, we’re building our Q&A page using real questions from real Albertans with responses from our team of subject matter experts at the ASC.
To encourage all of your questions and help get us started, we’ve developed our #ASKASC campaign and contest, here’s how it works:
From October 3 to 31, post your investing questions to our wall on Facebook or Twitter tag us @ASCUpdates and include the hashtag #ASKASC.
Once your question has been submitted, our team of gurus will start working on the response and you will be automatically entered into a draw to win a smartwatch! We’ll also be sure to notify you once your question has been answered and where you can find it on Checkfirst.ca. It’s simple – just #ASKASC all of your investing questions and take this opportunity to increase your investor knowledge and help other Albertans do the same.
Before you post, make sure your question is eligible. We can only help with general questions about investing and we can’t provide investment advice. Below are some examples of eligible questions:
1. If I invest in a fraudulent company, can I get my money back?
2. What rights do I have as a shareholder?
3. What is insider trading?
4. Where can I find information about a company I want to invest in?
And here are a few examples of questions we can’t answer:
1. Should I invest in XYZ Company?
2. Can you tell me if and when XYZ Company is going to launch an IPO?
3. Can you recommend any good financial advisers in my area?
Thank you for helping us help Albertans increase their investor education. We’re looking forward to answering your questions!
For full contest rules and regulations, click here.
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