January 30, 2004
For immediate release
Seniors Warned About Investment Fraud
Office of the Attorney General
“These products can sound tempting to older Canadians who’ve seen their retirement accounts dwindle in recent years – and who, after retirement, have little or no opportunity to recoup financial losses. Unrealistic expectations can set the stage for further losses,” said Attorney General Jamie Ballem. “The best way for seniors to protect their money from scams and fraud is to take an active role in investing their money.”
Senior’s should educate themselves and get involved in their investments. The following tips should be followed:
1. Consult a variety of credible sources of investment information. Just as you diversify your investments to reduce investment risk, you can also diversify your sources of advice. You should always feel free to get a second opinion. Ensure that the dealer in question is registered as such and is in good standing with the securities regulator of the province, and that the investment product proposed is legal.
2. Understand what you’re investing in. Before you invest, make sure you know how the investment works, and the risks of the investment. Recognize that high returns come with high risk. Don’t hesitate to research the investment, and ask your adviser to explain anything that’s unclear. Read the prospectus – it contains information about the terms of the investment, and how it works.
3. Know how your investments relate to your goals and objectives. Your investment choices should be a reflection of your goals and lifestyle. If something changes in your life, make sure you revisit your investment goals and objectives – and make sure to update your adviser! Your investment decisions during retirement will look different from those made in your 20's.
Seniors who are investing should be mindful of the most common indicators of investment fraud when considering an investment. Red flags include:
- Unrealistic promises of spectacular returns on investments, higher than current bank rates, with little or no risk;
- Enticing offers of tax avoidance through offshore investment opportunities;
- Ads or seminars promoting unregistered investments;
- High-pressure sales tactics, e.g. claims that the offer will expire shortly or that you are one of the lucky few to be invited to invest.
Investors who fall prey to investment fraud do have legal recourse. They can file a complaint with the securities regulator who may investigate the matter or refer it to the RCMP or other appropriate authority. However, securities regulators are not mandated to compensate investors for financial losses. In order to recover their money, investors must often resort to legal action.
Investors should be aware that a court case can be a difficult and time-consuming process and offers no guarantee of recouping losses. One should follow the old saying, the best defence is a good offence.
The Securities office offers a number of investor resources, including a brochure aimed at seniors – Protecting Your Finances - How to Avoid Investment Fraud and Scams.
To obtain information or report a fraud, contact the PEI Securities Office at 902-368-4550 or RCMP Commercial Crime at 902-566-7153.