CSA urges Canadians to “take the next step” to protect themselves from investment fraud

Montreal – More than a million Canadians have lost money in an investment fraud, according to recent research from the Canadian Securities Administrators (CSA). The 2009 CSA Investor Index found that Canadians feel confident and believe they are knowledgeable and responsible when it comes to investing, yet they are not taking the next steps to put their knowledge into practice. 

March is Fraud Prevention Month and the CSA is urging investors to move beyond simply knowing what they should do about potential investment fraud and take the next step to protect themselves and their financial future. 

“We are encouraged to see that the majority of Canadians are knowledgeable about what they should do when it comes to investing and investment fraud,” says Jean St-Gelais, Chair of the CSA and President & Chief Executive Officer of the Autorité des marchés financiers (Québec). “Unfortunately, many do not act on this knowledge, or their actions contradict their knowledge of investing and fraud prevention. 

“Investors need to be aware that not every investment opportunity is right for them and that some opportunities may not be appropriate for them, or may even be a scam,” says St-Gelais. 

The CSA urges all Canadians to take these simple next steps to protect themselves from investment fraud: 

1. Work with your investment adviser to assess and review your risk tolerance. According to the CSA Index, fewer than half of Canadians have worked with their financial adviser to assess their willingness to take risk. The CSA encourages you to meet with an adviser to determine your risk tolerance, and to review it at least once a year. Knowing your risk tolerance will help when deciding if an investment fits your goals and objectives. 

2. Familiarize yourself with common red flags of investment scams. Investment fraud is a serious concern. Investors should go to the CSA’s website www.securities-administrators.ca to visit the Avoiding Fraud page. There you can learn to identify the red flags of investment frauds such as affinity fraud, boiler room scams and more. 

3. Research each investment opportunity and do a background check on the person and company offering an investment. Researching each investment opportunity is important, but few investors actually take the time to complete a background check on the person or company offering an investment. Use the CSA National Registration Search to see if your investment adviser is registered to provide the services offered, and the CSA Disciplined Persons List to see if a person has ever been disciplined by a regulatory body. You can also contact your local securities regulator for a listing of any potential enforcement action against a company or individual.

4. Report any suspicion of investment fraud to your local securities regulator. Almost four in 10 Canadians have been approached with an investment fraud, most of them multiple times. Although 78 per cent believe it’s important to report even the suspicion of an investment fraud, only 26 per cent take that step. The CSA reminds investors that if you know or suspect you have been approached with a fraudulent investment, your next step should be to call your provincial or territorial securities regulator to report the incident.

The CSA, the council of securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets.

For more information: 

Sylvain Théberge
Autorité des marchés financiers

Wendy Connors-Beckett
New Brunswick Securities Commission
506 643-7745

Robert Merrick
Ontario Securities Commission

Ainsley Cunningham
Manitoba Securities Commission

Ken Gracey
British Columbia Securities Commission

Natalie MacLellan
Nova Scotia Securities Commission

Mark Dickey
Alberta Securities Commission

Barbara Shourounis
Saskatchewan Financial Services

Linda Peters
Office of the Attorney General
Prince Edward Island

Doug Connolly
Financial Services Regulation Div.
Newfoundland and Labrador

Fred Pretorius
Yukon Securities Office

Louis Arki
Nunavut Securities Office

Donn MacDougall
Securities Office
Northwest Territories