The Canadian Securities Administrators (CSA), the umbrella organization of the country’s provincial and territorial securities regulators, issued a warning yesterday (Thursday) against investment scams and misleading financial advice.
Do Not Trust, but Verify
The regulator highlighted that online financial advice is readily available, but investors must verify information sources. It also advised that investors should work with registered professionals to reduce the risk of financial fraud.
“Investment fraud is prevalent and increasingly sophisticated, affecting investors across the country,” Stan Magidson, the CSA's Chair and CEO of the Alberta Securities Commission, said in a statement.
“It's more crucial than ever for people to safeguard their financial interests by learning more about current scams and verifying sources of investment information.”
Regulators Fighting Frauds
The Canadian regulator is one of many global financial market regulators that raise an alarm against rampant scams. Many regulators, including the ones in the United Kingdom, Cyprus, and Belgium, even regularly issue warnings and periodically publish lists of fraudulent platforms.
The penetration of the Internet eased retail investment significantly; however, it ramped up the scams in the industry. Furthermore, such scams and frauds skyrocketed during the COVID-19 pandemic, taking advantage of people's vulnerability.
A survey conducted by Finance Magnates and FXStreet found that scammers mostly target traders on Facebook, followed by Telegram and WhatsApp.
The Canadian regulator highlighted that people must be very cautious when receiving financial advice on social media and “recognize that not all information is provided by qualified or well-intentioned individuals.”
Pointing out some of the common baits of scams, the Canadian regulator cautioned against tactics like guaranteed and/or high profits, no risk and urgent action, requiring access to electronic devices, and loss recovery.
“Don't rely solely on online content or influencers that promote investment advice. When uncertain about the quality of an information source, consult a qualified and registered investment advisor or financial professional,” the CSA noted.
