Be Wary of Investment Fraud

Recent studies show that as many as a million Canadians have been the victim of some type of investment fraud. Worse yet, many of these people have declined to report it to authorities. Promises of large sums of money combined with the pressure of a sales pitch often trick people into investing in fraudulent stocks or other products. By the time these people realize that they have been a victim of fraud their money is gone and it is too late. Even when reported, the probability of catching the investment con is quite low. Government regulations only have a minimal amount of money dedicated to fight investment fraud, and with it happening so often it is hardly realistic to think that these crimes will stop any time soon.

Investment cons tend to focus on susceptible groups and have well groomed spiels to obtain their money. Church groups, the elderly, and the online community are common preys. In a recent case publicized by CBC, even an investment advisor played the role of investment con. This particular con worked for a large company in St. John’s, Newfoundland and defrauded his clients over $400,000 over a seven year period ending in 2005.

Most frauds are not committed by complete strangers. Often the fraud is committed by someone the victims knows and trusts such as a friend, co-worker, business partner, or even a family member. The most common methods used are telephone, internet, mail, and false advertisements. Promises of obtaining a high return in a short period of time or the offer of a time-limited investment should warrant further questioning and investigation.

Perhaps the best defense for investment fraud is to do your own research and investigation before investing or choosing an investment advisor. Ask for references, accounting statements, and inquiring as to whether the government or other regulatory body supervises the seller. Hiring a professional and legitimate investment advisor can do wonders so long as they know the ropes of investing.