OSC issues investor alert about foreign stock scams

(March 12, 2003) The Ontario Securities Commission has issued a warning about cross-border and foreign securities sales following a number of complaints from investors. The scams typically involve an offer to invest in futures, options or foreign exchanges through an American or foreign firm. The fraudsters claim that they do not have to be registered to trade in Canada because of their foreign base.

“In fact, regardless of their status with other securities regulators, any person or company dealing in securities, including futures and options, in Ontario must be registered with the OSC,” the OSC says.

The securities commission warns that any investor handing over money to unregistered dealers outside of Canada loses any protection provided by Ontario’s Securities Act. “You will likely lose your money, if not outright, then through the extravagant commissions and fees that these types of firms usually charge on transactions,” the OSC adds.

The fraudulent offers usually come via an unsolicited phone call or e-mail, and the OSC notes that potential investors are often subject to “high pressure” sales tactics and will likely receive a detailed marketing package in the mail after the initial contact.

The OSC urges investors to be wary of unsolicited offers and suggests checking a firm’s registration status in the “market participants” section of the OSC Web site.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca