What the Alberta Securities Commission sees in 2019 just might apply to the global markets
Jan 02, 2019 — CALGARY, Jan. 2, 2019 /CNW/ – It’s a new year — with new investment opportunities. Investing is a great way to save for a secure retirement and reach other financial goals. However, it’s important for even the most sophisticated investors to be wary of opportunities that are just too good to be true. To help Albertans invest their hard-earned money wisely, the Alberta Securities Commission (ASC) has released its updated list of the top five risks investors should be aware of when considering investments in 2019. The list is based on information gathered by the ASC Enforcement team, who works year-round to identify and investigate potential violations and takes action to stop them.
The ASC’s top five investment risks for 2019 include:
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.
“Albertans continue to fall victim to fraudulent investments and, looking into 2019, we want to empower them to make suitable and informed investment decisions,” said Alison Trollope, Director, Communications and Investor Education with the ASC. “We periodically provide updates from our Enforcement team to help Albertans understand what types of investment scams are occurring in their communities, and to detect fraudulent activity before falling victim. Bottom line: make sure you do your homework and research the opportunity before you invest in anything.”
The ASC encourages Albertans to be cautious in 2019 of the red flags of fraud and report any suspicious investments to its public inquiries office. A wide range of free, unbiased tools and resources are available on Checkfirst.ca to help Albertans increase their financial literacy and make wise investment decisions.
The ASC’s Enforcement Division enforces Alberta securities laws by uncovering, investigating, and prosecuting breaches of those laws with a view to both stopping current misconduct and preventing future misconduct. Through proactive, fair, and visible enforcement action locally, and through collaboration with the Commission’s compliance divisions and with securities regulators and police forces, Canadian and foreign, the Enforcement Division seeks to foster investor confidence and promote the integrity of Alberta’s capital market, thereby protecting the investing public.
The ASC is the regulatory agency responsible for administering the province’s securities laws. It is entrusted to foster a fair and efficient capital market in Alberta and to protect investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada’s capital markets.
SOURCE Alberta Securities Commission