March 28, 2014
For immediate release
Investor Alert: beware of false registration claims
Environment, Labour and Justice
The Department of Environment, Labour and Justice is advising the public to beware of false registration claims.
Securities office staff is issuing this Investor Alert to warn investors about potentially fraudulent investment schemes that involve individuals or firms misrepresenting that they are registered to trade in securities.
Investors should be careful to check the background, including registration status, of any person who tries to sell them an investment product or service, and should avoid investing with anyone who falsely represents that they are registered to trade in securities.
Firms and individuals generally must register with the Prince Edward Island securities regulator in order to trade in securities or offer investment advice in Prince Edward Island. North American securities regulators will only register firms and individuals that meet specific qualifications and standards. Nevertheless, fraudsters may try to lure investors into investing with them by falsely claiming to be registered to trade in securities.
In a recent fraud case brought by the U.S. Securities and Exchange Commission (SEC), SEC v Fleet Mutual Wealth, the defendants allegedly promised investors guaranteed returns of 2-3 percent per week through the use of a high frequency trading strategy, but instead used investors’ money to operate a fraudulent scheme. In that case, the defendants allegedly recruited investors by misrepresenting that their firm was “registered” or “duly registered” with the SEC and pointing to the firm’s Exempt Offering filings to support this misrepresentation.
Having made a regulatory filing does not mean that the individual or firm is registered to sell investments or offer investment advice. If an individual or firm claims to be registered to sell you investments or offer you investment advice, verify that it is true. “Checking for appropriate registration is an important initial step for investors to protect themselves,” says Steve Dowling, General Counsel for the Consumer, Labour and Financial Services Division.
To assist investors, the Canadian Securities Administrators (CSA) – Canada’s umbrella organization of provincial and territorial securities regulators – offers a national registration search tool at www.aretheyregistered.ca that allows investors to easily check if a firm or individual is registered to sell securities or offer investment advice in their jurisdiction.
Investors may also check registration by contacting Securities office staff at 902-368-4550.