Investment FraudNSCC Dartmouth – March 2, 2010

Meet Sue• Recent graduate• Starting new job, recently

engaged• Wants to save money for

a down payment on a home

• Her friend Dave tells her about a fabulous – but secret – investment plan.

Meet Stuart• Financial Planner• Tells sue the opportunity

only open to major banks, but she can get “in on it”

• “Don’t tell your accountant, banker or lawyer”

Fast Cash• Shortly after investing the

minimum, Sue receives an interest cheque

• Convinced this is legit, she takes a small loan from her bank and invests more

• A week later, they she gets another cheque

The money dries up

• Time passes & no more money arrives.• Sue calls Dave, who hasn’t received anything

lately either.• Stuart: “Your cheque is in the mail.”• Still nothing.• She calls again, and find Stuart’s phone has

been disconnected.

What happened?• Sue calls the Nova Scotia Securities

Commission.• Stuart has taken millions of dollars from

hundreds of investors.• No one get’s their original investment back, or

the fantastic returns that were promised.• Prime Bank Instrument Fraud.

How do you protect your money?• Investing can be risky enough without having

to worry about whether a particular investment is a scam.

• How can you avoid what happened to Sue & Dave?– Educate yourself about the warning signs– Know what to look for and what to avoid

Know the Red Flags• “Guaranteed high return, no risk!”• “Insider tips – get in now!”• “Offshore investment – tax free!”• “Profit like the experts!”• "Great opportunity – your friends can’t be

wrong!”

Common Investment Scams

Affinity Fraud– Exploits trust in a group setting

Remember: Investigate BEFORE you invest – no matter who is selling

Common Investment Scams

Internet Fraud– Unsolicited e-mails, instant messages and

phoney websites

Remember: The internet can give easy access to you and your money, with no “return

address”

Common Investment Scams

Investment Seminars– Find potential investors by holding free seminars

Remember: There’s no such thing as a free lunch.

Common Investment Scams

Prime Bank Schemes– Promising high-yield, tax-free returns

Remember: Often the most sophisticated sounding investments are just false promises

in fancy lingo.

Common Investment Scams

Unsuitable Sales– One size does NOT fit all

Remember: Make sure your investments match up with YOUR needs and YOUR risk

tolerance.

Invest in knowing more• Registration• Realistic expectations• Written information• Time to Think• Review

Report Suspicious Investments

What do I do if I have an inquiry or a complaint?

1) Contact your adviser to see if he or she can answer your question

2) Contact your adviser’s supervisor, compliance officer, or manager

3) Contact your provincial securities regulator

Report Suspicious Investments

• Visit us online at www.gov.ns.ca/nssc to download a Complaint Form, which can be submitted by mail or fax

• Visit us in person at:1809 Barrington Street, Suite 501, Halifax, NS

• Call us at: (902) 424-4558

Questions?Questions?

• Visit www.beforeyouinvest.ca

• Or follow us on Twitter: www.twitter.com/B4UInvest

For more information