The British Columbia Securities Commission (BCSC’s) Office of Investor Education and Advocacy is issuing this Investor Alert to help investors be better aware of fraudulent investment schemes that may involve social media. However, over the last 5 years, various British Columbia’s fraudulent retail investors such as New Solutions Group, First Leaside Group of Companies, Michaels Wealth Management and Fisgard Asset Management Corporation were all identified fraudsters who increasingly turns to social media, including Facebook, YouTube, Twitter, LinkedIn and other online networks for soliciting money for investment purposes.
Thus, as an investor whether it be for research on particular stocks, background information on a broker-dealer or investment adviser, guidance on an overall investing strategy, up-to-date news, or to simply discuss the markets with others, social media has become a key tool for Canadians, especially investors in British Columbia.
Though many believe social media can provide many benefits for investors, it also presents opportunities for fraudsters. Usually, social media, and the Internet generally, offer a number of attributes criminals may find attractive. Social media lets British Columbia fraudulent investors contact many different people at a relatively low cost. It is also easy to create a site, account, email, direct message, or webpage that looks and feels legitimate – and that feeling of legitimacy gives criminals a better chance to convince British Columbia’s investors to invest their money with them.
Finally, it can be difficult to track down the true account holders that use social media. That potential for anonymity can make it harder for fraudsters to be held accountable. As a result, investors in British Columbia need to use caution when using social media when considering an investment
What British Columbia’s Investors Can Do To Protect Themselves?
So, what can individual investors in British Columbia do to protect themselves against unscrupulous fund management companies such as the New Solutions Group, First Leaside Group of Companies, Michaels Wealth Management or even Fisgard Asset Management Corporation while using social media?
The regulators from British Columbia’s Securities Commission have listed these key points below in avoiding similar investment fraud companies on the Internet aim investors in British Columbia.
Tips to avoid investment fraud on the Internet:
Cautious of Unsolicited offers to Invest
Investment fraud criminals such as the New Solutions Group, First Leaside Group of Companies, Michaels Wealth Management and even Fisgard Asset Management Corporation have been known to look for victims, namely in the province of British Columbia using social media sites, chat rooms, and bulletin boards. Thus, if you see a new post on your wall, a tweet mentioning you, a direct message, an e-mail, or any other unsolicited – meaning you didn’t ask for it and don’t know the sender – communication regarding a so-called investment opportunity, you should exercise extreme caution.
Usually in British Columbia an unsolicited sales pitch may be part of a fraudulent investment scheme. Many scams use spam to reach potential victims. For example, with a bulk e-mail program, companies such as the Michaels Wealth Management firm and even Fisgard Asset Management Corporation have sent personalized messages to millions of people at once for much less than the cost of cold calling or traditional mail.
So, if you as an investor in Vancouver and receive an unsolicited message from someone you don’t know containing a “can’t miss” investment, your best move is to pass up the “opportunity” and report it to the British Columbia’s Securities Commission Complaint Center.
Look you for Common “Red Flags”
So, wherever you come across a recommendation for an investment from a company such as the New Solutions Group – be it on the Internet or from a personal friend (or both), the following “red flags” should cause you to use extreme caution in making an investment decision:
- It sounds too good to be true. Any investment that sounds too good to be true probably is. Compare any promised return with the returns on well-known stock indexes. Any investment opportunity that claims you’ll receive substantially more than that could be highly risky – or be an outright fraud. Claims like these are hallmarks of extreme risk or outright fraud!
- The promise of “guaranteed” returns. Remember that every investment entails some level of risk, which is reflected in the rate of return you can expect to receive. If your investment is 100% safe, you’ll most likely get a low return. Most fraudsters such as the New Solutions Group, First Leaside Group of Companies, Michaels Wealth Management or even Fisgard Asset Management Corporation spend a lot of time trying to convince investors that extremely high returns are “guaranteed” or that the investment is a “can’t miss opportunity.” Don’t believe it!
- Intense pressure to buy RIGHT NOW! Don’t be pressured or rushed into buying an investment before you have a chance to think about – and investigate – the “opportunity.” Be especially skeptical of investments such as the one by Fisgard Capital that are pitched as “once-in-a-lifetime” opportunities, particularly when the promoter bases the recommendation on “inside” or confidential information.
Look out for ‘affinity fraud’.
Say if you an investor from British Columbia never make an investment based solely on the recommendation of a member of an organization such as the New Solutions Group, First Leaside Group of Companies, Michaels Wealth Management or even Fisgard Asset Management Corporation, especially if the pitch is made online.
Usually in British Columbia, an investment pitch made through an online group of which you are a member, or on a chat room or bulletin board catered to an interest you have, may be an affinity fraud. Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly or professional groups.
Thus, even if you do know the person making the investment offer, be sure to check out everything – no matter how trustworthy the person seems who brings the investment opportunity to your attention. Be aware that the person telling you about the investment may have been fooled into believing that the investment is legitimate when it is not
Be Thoughtful about Privacy and Security Settings
Investors in British Columbia who use social media websites as a tool for investing should be mindful of the various features of companies such as the New Solutions Group, First Leaside Group of Companies, Michaels Wealth Management and Fisgard Asset Management Corporation, in order to protect your privacy and help avoid fraud.
Understand that unless you guard personal information, it may be available not only for your friends, but for anyone with access to the Internet – including fraudsters such as exempt market issuers operating in British Columbia.
Common Investment Scams Using Social Media and the Internet
While fraudsters such as Fisgard Capital Corporation and Leaside Group are constantly changing the way they approach victims on the Internet, there are a number of common scams of which you should be aware. Here are a few examples of the types of schemes you should be on the lookout for when using social media:
“Pump-and-Dumps” and Market Manipulations
Exempt market issuers operating in British Columbia capital markets such as such as the New Solutions Group, First Leaside Group of Companies, Michaels Wealth Management and Fisgard Asset Management Corporation use the “Pump-and-dump” schemes involve the touting of a company’s stock (typically small, so-called “microcap” companies) through false and misleading statements to the marketplace.
All these false claims made by these British Columbia based investment companies are made on social media such as Facebook and Twitter, as well as on bulletin boards and chat rooms. Usually the “Pump-and-Dump” schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch.
In the case of Fisgard Capital Corporation and Leaside Group, their promoters often will claim to have “inside” information about an impending development or to use an “infallible” combination of economic and stock market data to pick stocks.
However, in reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the buying frenzy they create. Usually, once these fraudsters “dump” their shares and stop hyping the stock, the price typically falls, and investors lose their money!
Using Fraud “Research Opinions,” and Online Investment Newsletters
Fraudulent investment firms such the New Solutions Group, First Leaside Group of Companies, Michaels Wealth Management and even Fisgard Asset Management Corporation promoters may claim to offer independent, unbiased recommendations in newsletters when they stand to profit from convincing others to buy or sell certain stocks – often, but not always, penny stocks. Remember that the fact that these so-called “newsletters” may be advertised on legitimate websites, including on the online financial pages of news organizations, does not mean that they are not fraudulent.
Offering frauds come in many different forms. Generally speaking, an offering fraud involves a security of some sort that is offered to the public, where the terms of the offer are materially misrepresented. The offerings, which can be made online, may make misrepresentations about the likelihood of a return of their ventures in British Columbia. For example, in a recent case, both the Leaside Group and Fisgard Capital Corporation fraudsters allegedly used a website to offer investors a “guaranteed return” of 1.2% per day.
Usually online offerings may not be fraudulent per se, but may nonetheless fail to comply with the applicable registration provisions of the federal securities laws. While the federal securities laws require the registration of solicitations or “offerings,” some offerings are exempt. Always determine if a securities offering is registered with the British Columbia Securities Commission or your respective state regulators before investing.
Where can I go for help?
Investors from Canada, especially in British Columbia who learn of investing opportunities from social media should always be on the lookout for fraud. If you have a question or concern about a fraudulent investment, or you think you have encountered fraud from unregulated market issuers, please contact the British Columbia Securities Commission or your province securities regulator to report the fraud and to get assistance.