CSA warns investors about “flashy” investment pitches

CSA is warning Canadians to not let extravagant promotions for new sectors or novel investing opportunities lead them into an unsuitable, unsustainable or fraudulent investment.

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It urges Canadians to be wary of flashy headlines about emerging businesses in areas such, as medical marijuana, green energy or digital currencies, and to continue to do their homework before they invest.

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“Too often we see investors buying into the latest, greatest investment opportunity based on information that is light on details and promotes the investment as a ‘can’t miss’ opportunity,” says Bill Rice, chair of the CSA and chair and CEO of the ASC. “There is no such thing as a ‘can’t miss’ investment, and investors must take time to research the validity of the business, the risk factors involved and the investment’s suitability for meeting their personal finance goals.”

Read: U.S. regulators want better fee disclosure

There are a number of ways you can help clients before they invest.

• Learn more about the company and the product it is offering.
  • What is its strategy and timeline?
  • Is there a market for the product?
  • What stage of development is it in?
  • What resources (i.e. cash, permits, technical capabilities and leadership) are currently available and committed?
• Determine if the investment meets a client’s investing criteria, such as the minimum investment amount, the risk profile and the type of investment.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.