Understanding Regulatory Alerts and Cautions
Let’s say you have $500 you’re considering investing. You see a pretty slick ad on Facebook for an opportunity to get in on the ground floor of an exciting new financial company.
It could be legitimate, or it could be a fraud. One of the easiest things to check is whether the company has been flagged in an Investor Alert or Caution.
Keeping Manitoba investors informed of potential threats from fraud is part of the Manitoba Financial Services Agency’s mandate. The Manitoba Securities Commission, part of the MFSA, is the primary regulator for securities in our province.
In 2013, the Agency launched recognizeinvestmentfraud.com as both a source for information on fraud prevention and a repository for Investor Alerts and Cautions.
Investor Alerts and Cautions are issued by the MFSA to notify the public about individuals and companies who appear to be engaging in ongoing, potentially harmful securities or financial activity that poses a risk to Manitoba investors. Although the Agency issues alerts and cautions on a regular basis, there will always be bad actors who may not yet be listed—we always recommend due diligence and thorough research prior to making any investment.
None of the individuals or companies named in an Investor Alert or Caution are registered to engage in the trading of securities in Manitoba. Unregistered entities are often one of the primary red flags of fraud.
Alert vs. Caution: What’s the Difference?
Investor Cautions are warnings to potential investors that an individual or business is not registered to engage in selling securities in Manitoba, and/or their products are being offered in a manner contrary to or directly violating local securities laws. The Agency advises extreme caution when dealing with entities listed in an investor caution, as they could be fraudulent.
Investor Alerts are more serious warning issued by the Agency, which typically involve multiple victims, considerable monetary losses, or a fraud spreading very quickly. We strongly recommend investors avoid any contact with entities named in an Investor Alert.
***Always check the registration of any person or entity offering an investment opportunity before investing funds. You should also check the Canadian Securities Administrators’ Investor Alerts for cautions and alerts issued by other Canadian securities regulators.
Further Reducing Your Risk
All investments, even completely legitimate ones, carry an element of risk.
You can reduce your risk by:
- Conducting further online research on the parties offering the investment opportunity and the investment product being offered. Do not assume websites are always legitimate;
- Understanding exactly what you are investing in and how the investment, product or service operates. Never invest in something that you do not fully understand;
- Knowing the red flags of investment fraud.
Twenty years ago, it might have been more difficult to get information on whether a company was legitimate or not. But with a search engine at your fingertips, there’s no reason not to spend a few extra minutes checking for red flags. Your wallet will thank you.
This article incorporates content originally released by the Nova Scotia Securities Commission, and has been used with the expressed permission of the NSSC.
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