• A wolf in sheep’s clothing?
There is a relationship between risk and reward; generally, the higher the potential reward, the higher the risk. 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. Often, salespeople will position the investment as an “exclusive opportunity,” or “how the wealthy make their money,” which is really just a high-pressure sales tactic. It’s your hard-earned cash; Albertans need to take the time to invest it wisely.
• “My friends can’t be wrong, so it must be safe, right?”
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 the most common link. Scam artists will often work their way into groups and organizations, building relationships with respected or influential members who they use to recruit new investors. Research and checking registration are both important steps when considering an investment and help to prevent affinity fraud.
• “Psst! I know something no one else knows.”
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 are aware of or suspect insider trading or other securities law violations by their employer can now act as a “whistleblower.” This new program enables individuals to provide critical information about securities misconduct with increased confidentiality protections and without fear of repercussion. Whistleblowers can offer important information to help identify and investigate potential violations as early as possible.
• “Don’t miss this new opportunity! Get on board now!”
New and emerging industries often give rise to a range of exciting investment opportunities. Unfortunately, scam artists will often build schemes around the latest trends as there is limited information and history available, making it easier to spread false information. Recent examples the ASC Enforcement team has been tracking include potential scams related to cannabis and cryptoasset investments. As with any investment, it’s important to understand the risks associated with the business and use caution before buying into hype.
• “Trust me, I’m authorized to sell this investment.”
Reports of non-registered individuals selling investments are on the rise. At the same time, according to the ASC’s 2018 Alberta Investor Study, four in five Albertans are not checking the registration of their advisor. Generally, anyone offering investments in Alberta must be registered with the ASC. Albertans can quickly and easily verify the registration of any advisor or organization they’re working with by visiting the ASC’s consumer website Checkfirst.ca.