Securities regulators across Canada have collectively issued a warning to the Canadian public to ignore unsolicited investment advice they receive as e-mail.
Investment spam is a growing concern, according to The Canadian Securities Administrators. The stocks being promoted are generally those belonging to microcap companies that trade on smaller, over-the-counter markets, which aren’t subject to the same regulations as established exchanges like the TSX or NASDAQ.
“It makes it difficult for investors to check into because they have fewer and fewer requirements. In some cases, they’re not even recognized by the Canadian securities regulators or the United States ones,” said Tamera Van Brunt, director of communications and investor education for the Alberta Securities Commission.
“We thought we’d take the opportunity to educate people about this concern that we have – common red flags, things to watch out for and steps they can take. This is just one avenue that fraudsters try to get money,” she said.
The spam e-mails aren’t necessarily being sent out by the companies that are issuing the stock, but by third parties that are attempting to artificially inflate the stock prices and benefit from the proceeds.
The Canadian Securities Administrators, a body which comprises every provincial and territorial regulatory, routinely receives complaints about these e-mails, said one representative. Starting in June, the CSA began issuing bulletins designed to help investors discern real opportunities from those that are just designed to bilk them for money.
It became clear that spam represented one of the biggest problems in this area, said Perry Quinton, manager of investor communications at the Ontario Securities Commission.
“We’re starting to see that investment spam is starting to take off. It’s not just investors that are getting these; we get these at the regulator. I get these at work. It’s certainly something that’s out there,” she said.
“It’s an ongoing thing that doesn’t seem to be going away,” agreed Van Brunt. “Part of our mandate across the country in each regulator’s jurisdiction is to protect investors. We find the best protection is through education and preventative measures.”
“The regulators’ advice is similar to others given by anti-spam advocates: don’t provide personal or financial information to a person or company you know nothing about. “You don’t even know who’s approaching you, so why would you even invest with them?” said Van Brunt.
More information is available on the CSA’s Web site. Specific jurisdictions also offer their own advice on safe investing. The OSC, for example, runs www.checkbeforeyouinvest.ca.