Inform clients about these nefarious threats

By Staff | January 11, 2017 | Last updated on January 11, 2017
2 min read

Forget market and volatility risks: your client could face more nefarious threats.

The top five investor risks for 2017, as identified by the Alberta Securities Commission (ASC), mostly involve scams. Here’s what your client should guard against:

  • Being lured by “the next big thing.” While investing in an emerging industry might sound appealing, it’s important to use caution before buying into the hype. There’s usually little information available on these new companies, which makes it easy for scam artists to spread fiction. Company shares in emerging industries can easily rise based on rumours, yet many of these stocks are highly speculative.

Other ways scam artists profit from the next big thing is by taking advantage of the state of the economy, an epidemic or a natural disaster. For example, when the Zika virus began to spread worldwide, fraudsters promoted so-called investment opportunities for companies developing Zika vaccines.

Read: Two men sentenced to jail over fraud convictions

  • Deceptive online advertising. Scam artists often promote fraudulent opportunities using social media, text messages and pop-up ads. They may use photos of celebrities (without permission) to persuade people the celebrities support the investment.
  • Offshore investments. Sending money to companies with “offices” in countries overseas is a red flag for investment fraud. Current popular offshore scams include binary options, foreign exchange (forex) and commodity trading. When investors send their money overseas and something goes wrong, it can be difficult or impossible to get the money back, and regulators can do little to help.
  • Binary options scams. Binary options are essentially bets on whether the value of an asset will increase or decrease within a fixed time frame. There are no registered binary options dealers in Canada. Based on information compiled by the ASC, Albertans who fall victim to binary options scams lose more than $20,000 on average. Binary options companies invest a lot of money in advertising to lure investors.
  • Unregistered sources. With limited exceptions, anyone selling securities or offering investment advice in Canada must be registered. Investors can check the registration of a person offering securities investments using CSA’s national registration search.

Read: How banned IIROC and MFDA advisors can still sell insurance

The ASC offers these tools and resources for investor education. The OSC’s investor alerts, which in 2016 included a warning about binary options, are here.

Also read: Best interest standard tops investor wish list staff


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