2021 Top Investment Risks

February 11, 2021

Awareness

As you consider your financial planning for the year ahead, it is important that you research any investment to ensure it’s right for you. Do you have the information necessary to protect yourself from the common tricks of scam artists? Awareness is an important part of crime prevention. A global pandemic has created a stressful situation for many people that can often be exploited by fraudsters. Education is your best defense to avoid becoming a victim of these types of crimes.

To inform and help empower you to make the right investment choices and to protect yourself, the Alberta Securities Commission (ASC) released its list of the top investment risks and possible scams to look out for in 2021. This list is based on investor complaints, ongoing investigations and current enforcement trends


Investments related to COVID-19

A common scam is a pump and dump scheme, where fraudsters promote the opportunity to invest in new products or services to (in the case of COVID-19) aid in the battle against the pandemic. Their claims are false and misleading. After they have heavily promoted (“pumped”) the “opportunity” and the stock prices get artificially inflated, the fraudsters “dump” their stock at the high price, leaving investors with nothing once the truth is revealed and the price of the stock falls dramatically. When investing, do your own homework and carefully research the company and the investment. Make sure you are comfortable with the risk associated with the investment you are considering.

New and emerging industries

New and emerging trends/industries make it easier for fraudsters to build investment scams and promote them with false information. There is usually limited information surrounding emerging industries and plenty of hype and excitement for their future potential. While the new industry may be legitimate, be wary of anyone offering you an investment that seems to have vague or confusing details and sounds too good to be true.

Great expectations

Be wary of high-risk investment opportunities, especially if they promise high returns resulting from a proposed deal involving a letter of intent. Proposed deals can fall through, so if it is being promoted as a sure thing, you should be cautious. Before you invest, research the company, the deal and all the parties involved. Even if it is not fraudulent, make sure you are comfortable with the risks associated with the investment.

Affinity fraud

Affinity fraud occurs when victims are introduced to scams by someone they know. It could be from family members, friends or co-workers. They pretend to be part of the community and take advantage of the trust and relationships that are already established. They often flaunt their success or wealth and use unsuspecting people to promote the scam to others who trust them. Even if you trust the person encouraging you to invest, protect yourself by researching the person and/or company selling the investment, and make sure they are registered to sell it.

Non-registered people selling investments

Generally, anyone selling investments in Alberta must be registered with the ASC and lack of registration is a key red flag of fraud. Be sure to check the registration of any adviser or organization by visiting CheckFirst.ca. Be cautious of anyone who tells you that registration is not required for the products being offered.

Fraudulent ads to work from home as a day trader

Ads are appearing that claim you can make good money by working from home as a day trader. They say no experience is necessary and all you need to do is pay a fee for the training. However, often the firms offering these services are not legitimate and the goal is to steal the money you paid as a “fee.” It is important to remember that you need to be registered to trade securities. Also, trading stocks or foreign exchange is considered high-risk and complicated.

Protect yourself in 2021. Do your research. Keep an eye open for the red flags of fraud and report any suspicious investments to the ASC’s public inquiries office.ASC’s public inquiries office



Friendly Reminders



Report crime online!

The RCMP are encouraging all Albertans to report eligible crimes online (select property crimes under $5,000). Reporting less serious crimes online helps emergency dispatch and frontline members focus their time on high-priority calls. It provides a convenient way to share photos to the RCMP as well. These reports assist in crime analysis, aid in establishing trends and patterns, and ultimately leads investigators to the chronic offenders. It also assists in making decisions about how and where to deploy resources. Crimes reported online will be taken just as seriously as crime reported in any other way.  

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