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INVESTOR
OFFICE
Protect Your Money
INVESTOR
OFFICE
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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.
INVESTOR
OFFICE
We heard from investors
Common issues and concerns
Investment fraud
What is an advisor responsible
for
Lack of understanding of fees
paid to advisors and investment
performance
Restitution
Outliving savings and losing
money
Dealing with unexpected events
that could impact retirement
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INVESTOR
OFFICE
Financial issues of older Canadians
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INVESTOR
OFFICE
This is a divider slide
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Enforcement Branch
INVESTOR
OFFICE
Agenda
1. About the Enforcement Branch
2. Investment fraud review
3. Fraud warning signs
4. Types of scams
5. Tips for protecting your money
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
In 2014-15
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
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
Warning signs of fraud
High-pressure tactics – Act Now!
Phone call, e-mail 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
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INVESTOR
OFFICE
Common types of fraud
Affinity
Ponzi/pyramid
Boiler room
Pump and dump
Double dip
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
Boiler room
Target: Anyone with money to invest
How it works
Typically starts with an
unsolicited phone call or e-
Business appears legitimate
– address in financial
district; has website and toll-
free number
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INVESTOR
OFFICE
Pump and dump Target: Anyone with money to invest
How it works
Typically starts with an unsolicited
phone call or e-mail
Encouraged to buy promising over-
the-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
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INVESTOR
OFFICE
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”
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INVESTOR
OFFICE
Do a background check before you invest aretheyregistered.ca 1-877-785-1555 Investor alerts
Concluded and ongoing
disciplinary proceedings
Investment fraud checklist and
other related materials
www.osc.gov.on.ca
Google (search) names
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INVESTOR
OFFICE
If you suspect a scam
Contact us
1-877-785-1555
Your local police
Canadian Anti-Fraud Centre
www.antifraudcentre.ca
1-888-495-8501
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INVESTOR
OFFICE
This is a divider slide
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Working with your advisor
INVESTOR
OFFICE
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.
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
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!
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INVESTOR
OFFICE
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.
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INVESTOR
OFFICE
Research
Fund facts
Key information about mutual
funds
Easy to understand
Apples-to-apples comparisons
Available through your advisor,
fund company websites and at
www.sedar.com
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
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 1-888-451-4519
or obsi.ca
Need help?
OSC Contact Centre
1-877-785-5555
We operate in English but are able to
handle enquiries in over 200
languages.
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
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
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INVESTOR
OFFICE
Thank you
Contact Centre
1-877-785-1555 (Toll free)
1-866-827-1295 (TTY)
Investor Office
Re: Investing
GetSmarterReInvesting.ca
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