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Investor Alerts

Special Alert

Limitation Periods Reduced from SIX years to TWO

Investors should take note that some provinces have reduced general limitations period from six years to two years. Although there are some exemptions for the Securities Act, the two year limitation period will generally apply to aggrieved investors. At the first sign of a problem check with a securities lawyer to determine if the two year limitation period would apply to you.

Be aware that the time you spend with the investment company or the regulators will NOT stop the clock, and you may have only two years from the action that caused your loss to start civil action. Some aggrieved investors have taken more than two years to deal with industry and regulators and could be statue barred from proceeding to civil litigation.

Making a complaint to the Ombudsman for Banking Services and Investments (OBSI) can stop the clock, but you must determine how this will effect your situation.

Investors with a significant complaint or substantial loss should first seek legal opinion prior to taking any action or starting a complaint with industry or regulators.

 

General

In addition to the risks inherent in most investment products the small investor faces the added risk of falling prey to a financial predator. It may be someone operating a scam, it could be a seller of financial products who is more intent on commission maximization than looking after your best interests, or it could be fraud even within the regulated investment industry.

Although the OSC has eliminated many of the penny stock dealers who had operated for far too long, there will always be financial predators to plague the small investor. For many years the penny stock dealers were able to operate without hindrance selling unsuspecting investors worthless shares.

Many investors have also lost their savings when they placed their trust in an investment adviser or broker who worked with a main stream company. A few brokers or financial advisers are either incompetent or willingly breach the rules when they use their clients' accounts to generate income for themselves. Many people have suffered extreme loss particularly when they have been convinced to use leverage. Whether investors have been convinced to mortgage their home, take a bank loan, or to use margin to invest the result is the same. If the value of the investment goes down the loss is accelerated with the cost of borrowing for leverage. 

Investors should check the comprehensive alphabetical list of disciplined persons on the CSA website to determine if their representative or a prospective representative has been disciplined. It is also an opportunity to see which firms employ disciplined persons.

Rip-Off Report

Victim of a consumer Rip-off? Want justice? Rip-off Report™ is a worldwide consumer reporting Website & Publication, by consumers, for consumers, to file & document complaints about companies or individuals who rip-off consumers.

Unlike the Better Business Bureau, badbusinessbureau.com / Rip-off Report™ does not hide reports of "satisfied" complaints. ALL complaints remain public in order to create a working history on the company or individual in question; unedited.

Frauds and Scams

Many investors have fallen prey to investment scams and frauds. The Ponzi scam is often referred to and still exists today. The first investor is offered a handsome rate of return and at first receives these payments. Not realizing that it is simply some of his own money he becomes a believer and readily encourages others. When the perpetrator has collected as much as he can he disappears.

Pyramid schemes operate on the same principal. Those who are first in, will often do well at others expense. However, the scheme soon runs its course and many lose all of the money they have put in. These scams are not legal, but still operate. They will continue as long as people fail to realize that it is just a scam.

The "Nigerian letter" has been around for a long time and continues to arrive in e-mail today. People are promised a portion of a large amount of money simply for assisting the transfer of these sums to your country. The going rate is generally 20% of tens of millions and all they need are the details of your account to effect the transfer. If someone responds there could be some up front expenses in which you are required to "invest" several thousand dollars to facilitate the transfer. 

To protect yourself against frauds and scams you need to investigate before you invest. Learn about the many scams and frauds that continue to circulate. Don't be caught up by the promise of high returns. Think about it. Why would anyone offer you the chance to make big profits unless there was something in it for them?

How can you protect yourself?

Although there are regulators for most of the sellers of financial products, the regulation is not centralized. Self regulatory organizations often are compromised because of an inherent conflict of interest. To minimize the risk of losing your savings you should invest some time to learn about the various ways that people lose money as well as learning about investing. Most importantly you need to check the credentials of anyone you are considering as someone to look after your investment.

You can check the credentials of your adviser or proposed adviser by calling the regulators in your province or by checking on the Canadians Securities Administrator's website.

To minimize the risk of losing your savings to scams and frauds, you need to know the types of schemes that abound in our society. Some of them will seem obvious to you, while others may seem quite legitimate. Remember to check with the regulators before starting a new investment. Make inquiries to ensure that the person you are considering dealing with is properly qualified and registered.

That should eliminate some of the possibilities, but does not guarantee protection against fraud. One investor had received a clean bill of health for a registered representative, when he made an inquiry just a few weeks before the representative was arrested for fraud. Although the regulators were already aware of this persons behaviour they do not make information available about complaints. It can take several years before these fraudsters are convicted so there is no early warning system with the regulators.

Therefore you need to know about the many frauds that are practiced on the investor who is not aware. It is much easier to avoid losing your money than it is to get it back.

Securities Commissions' Investor Alerts

The problem of investors losing their savings to fraud artists is of such great magnitude that the regulators now provide special sections on their web sites. For convenience direct links are provided.

Ontario Securities Commission - Investor Warnings

North American Securities Administrators Association - Fraud Center

Other sources of information

There are many sources of information which provide details of frauds and scams. Links to a few of these sources are provided.

Bogus Bond warning - OSC warning to investors on bogus bonds.

RCMP: Scams and Frauds - Prime investments, pyramids and other scams.

Rip-off Report ™ - Worldwide consumer reporting Website & Publication.

RRSP scam warning - OSC warning to investors.

Sage Advice for Investors

Many investors have fallen prey to unscrupulous advisor's. Some of them have worked for major companies and some have created their own companies. In essence they are financial predators who are determined to use your savings to generate income for themselves or in some cases to fraudulently take your money.