Protect Your Money INVESTOR OFFICE

Transcription

1 Protect Your Money

2 OSC We are an independent crown corporation that regulates the securities industry. We aim to protect investors from practices that are unfair, improper or fraudulent while ensuring the capital markets run fairly and efficiently. Investor Office We re here to give you the information you need to invest wisely and confidently, ensure your needs are understood by those who make the rules, and share your voice with the boardrooms of Bay Street. 2

3 We heard from investors Common issues and concerns Investment fraud Restitution What is an advisor responsible for Outliving savings and losing money Lack of understanding of fees paid to advisors and investment performance Dealing with unexpected events that could impact retirement 3

4 Financial issues of older Canadians 4

5 This is a divider slide Enforcement Branch 5

6 Agenda 1. About the Enforcement Branch 2. Investment fraud review 3. Fraud warning signs 4. Types of scams 5. Tips for protecting your money 6

7 Enforcement Branch Investigates and litigates Securities Act breaches Seeks orders in public interest before adjudicative tribunals of the Commission and the courts Mix of investigators, forensic accountants, lawyers and support staff Team types Case Assessment Investigation/Litigation Insider Trading Joint Serious Offences 7

8 In cases of wrongdoing We can: reprimand, issue cease trade orders, remove exemptions, ban individuals from acting as directors and officers, restrict registration and impose monetary penalties seek jail terms in quasi-criminal and criminal proceedings 8

9 In Commenced 28 proceedings involving 41 individuals and 27 companies 8 cases alleged fraudulent activity Concluded 36 proceedings against 50 individuals and 36 companies 8 cases involved fraudulent activity 9

10 Investment Fraud Overview Fact: 1 in 20 Canadians is a victim of investment fraud Investment fraud is an underreported crime Fact: Almost 3 in 10 Canadians have been approached with a potential fraud. Fraud doesn t just impact your wallet can affect your mental and physical health, relationships, quality of life 10

11 Warning signs of fraud High-pressure tactics Act Now! Phone call, from someone you don t know Promise of high return with low risk Encouraged to recruit friends/ family Unregistered seller Suggest falsifying financial information Tax avoidance strategy Company about to be listed on an exchange 11

12 Common types of fraud Affinity Ponzi/pyramid Boiler room Pump and dump Double dip 12

13 Affinity fraud Target: Groups sharing a common identity (e.g., cultural, religious, occupational, sports related) How it works Con artist builds trust and may even endear themselves to (or be part of) the group s leadership Person could be from within the group or has worked their way in 13

14 Ponzi/pyramid scheme Target: Investors are recruited and encouraged to recruit others How it works Investment returns are paid with money from new investments not earned from invested money 14

15 Boiler room Target: Anyone with money to invest How it works Typically starts with an unsolicited phone call or e- mail Business appears legitimate address in financial district; has website and tollfree number 15

16 Pump and dump Target: Anyone with money to invest How it works Typically starts with an unsolicited phone call or Encouraged to buy promising overthe-counter or penny stocks Con artist holds large blocks of shares as price driven up, share value increases When con artist sells, share value plummets victims left with worthless shares 16

17 Double dip Repeat scams Fact: 35% of fraud victims are defrauded more than once How it works Con artists create, reuse and sell lists of their victims Initial investment will pay off if you send more money A previous investment will pay off if rolled into a new one If you tell the regulators, they ll shut us down and you won t make back your money 17

18 Do a background check before you invest aretheyregistered.ca Investor alerts Concluded and ongoing disciplinary proceedings Investment fraud checklist and other related materials Google (search) names 18

19 If you suspect a scam Contact us inquiries@osc.gov.on.ca Your local police Canadian Anti-Fraud Centre

20 This is a divider slide Working with your advisor 20

21 Partnering with a financial advisor CheckBeforeYouInvest.ca First question Are you and your firm registered? Also ask What are your qualifications? How much experience do you have? What products and services do you offer? Who are your clients? What is your investment philosophy? How are you paid? How will you work with me? Before investing with anyone, check their registration and credentials. 21

22 Your advisor s responsibility Must know you investment goals, financial circumstances, time horizon Must know the product they recommend structure, features, fees, risk Must make suitable investment recommendations Must tell you how he s paid 22

23 Care about your investments Your role Be open and honest about your finances Understand your money personality Understand what you re investing in Ask questions! 23

24 Before you invest Your advisor should answer the following questions for you How does this investment work? Why should I buy it? How will it help me reach my goals? What s the level of risk? What are the costs to buy, hold and sell it? What are the costs to buy, hold and sell it? When can I sell it? Will I pay fees or penalties if I need to get my money out sooner? Don t invest if you don t understand the product, the risks and how much it costs. 24

25 Research Fund facts Key information about mutual funds Easy to understand Apples-to-apples comparisons Available through your advisor, fund company websites and at 25

26 Assessing your advisor Assess your total return over time Calculate your total costs each year Compare your results to benchmarks Assess the value your advisor provides Decide if you re happy with results over time 26

27 Signs of a problem You rarely hear from your advisor Your advisor s suggestions don t seem to match your goals Your advisor makes frequent or unusual trades You feel pressured to invest 27

28 How to make a complaint 1. Talk to your advisor and their manager 2. Escalate your complaint within the firm in writing 3. Contact the Ombudsman for Banking Services and Investments at or obsi.ca Need help? OSC Contact Centre Inquiries@osc.gov.on.ca We operate in English but are able to handle enquiries in over 200 languages. 28

29 GetSmarterAboutMoney.ca An investor education site designed to help Canadians better understand investing and have meaningful conversations with their advisors. Free calculators, planning tools, budget sheets, quizzes and videos Reader-friendly articles, blogs and infographics 29

30 Other resources and tools Brochures Investor News get the latest news and updates GetSmarterReInvesting.ca Re:Investing ask us your investing question or about the OSC 30

31 Thank you Contact Centre (Toll free) (TTY) Investor Office Re: Investing GetSmarterReInvesting.ca 31