FAIR Canada
FAIR Canada Newsletter

September 2013

FAIR Canada's 5 Rules for Avoiding Investment Fraud

While there may be no foolproof way to protect against investment fraud, by verifying registration, knowing some of the major signs of investment fraud, and following some simple rules Canadians can better protect themselves from fraud.

 

CBC sports broadcaster John Hancock recently filed a legal claim against an investment advisor and an investment services firm, prompting CBC Radio to contact FAIR Canada to ask questions about how to prevent financial fraud. Ermanno Pascutto, FAIR Canada's Executive Director, recently discussed financial fraud in Canada during 'Financial Fraud Epidemic' on CBC Metro Morning and Ontario Morning.

 

Many Canadians do not know the warning signs of fraud. Many intelligent people are lured in by false promises and seemingly trustworthy fraudsters.

 

RULE 1 - ONLY DEAL WITH REGISTERED ADVISORS

 

Only deal with registered advisors and firms. Check the registration of both the advisor and the firm before you invest. (Note: Securities commissions license (otherwise known as "register") advisors to sell investments.) You should also check the financial advisor's disciplinary history before investing.

  • Discipline - You can review disciplinary history records on the Disciplined Persons List. If the advisor has a history of disciplinary action, this is a red flag. You should make sure you fully understand any proceedings brought against them before investing, or find a provider who does not have a disciplinary history.

 

We recommend that investors deal with advisors who work for a firm that is a member of a self-regulatory organization (referred to as an "SRO") - either the Investment Industry Regulatory Organization of Canada (IIROC) or the  Mutual Fund Dealers Association of Canada (MFDA). Such firms are subject to a closer level of regulation and supervision. They also offer greater financial stability and are required to participate in compensation funds which may provide compensation to investors in the event of firm insolvency.

 

Please click here to read the rest of the rules for avoiding investment fraud.

 

FAIR Canada supports common securities regulator

 

FAIR Canada has indicated its support in response to the announcement of an agreement to establish a cooperative capital markets regulatory system. FAIR Canada's Executive Director appeared on BNN's Headline to discuss the announcement (see here for part two), and FAIR Canada has been quoted in a number of media articles, including:

 

OBSI's Consumer and Investor Advisory Council Questions Proposed Changes and Calls for Multi-Stakeholder Discussions

 

OBSI posted the comments of its Consumer and Investor Advisory Council (CIAC) on the proposed changes to OBSI's Terms of Reference. The CIAC cautions OBSI's Board that some of the proposed changes raise fundamental issues that should not be resolved as part of an overhaul of its Terms of Reference but should be the subject of a multi-sector, multi-stakeholder review. The proposed elimination of segregated funds and the removal of the investigation of systemic issues in respect of investment complaints by consumers are topics for broader discussion. The CIAC suggests that OBSI should continue to address "broad based", "collective" or "common" issues where consumers are harmed while referring systemic issues that are properly the concern of regulators or government to such bodies. The CIAC's overall recommendation is that OBSI's Board should only make changes to the Terms of Reference that are either purely housekeeping in nature or are necessary to achieve approval by the Federal Consumer Agency of Canada as an external dispute resolution provider for banking complaints while deferring the other proposed changes for further discussion.

 

 

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