Personal Investor: The latest investment scam making the rounds
If you are contacted about investing in binary options, it’s a scam.
Binary options are not permitted to trade in Canada and that’s why securities regulators are warning investors to stay away. Countless Canadians have already fallen victim.
Legitimate options are hard enough to understand but binary options are basically all-or-nothing, high risk bets aimed at investors with little to spend and dreams of getting rich quick.
It’s likely this scam doesn’t even involve investing in anything, and the scammers are simply pocketing the cash.
Coincidentally, March is Fraud Prevention Month. The Ontario Securities Commission has a checklist of questions you should ask yourself if you suspect you are being scammed.
Are you dealing with a registered advisor?
Anyone selling securities or offering investment advice in Ontario must be registered with the Ontario Securities Commission (OSC), unless they are exempt from this requirement. To check whether someone is registered, call the OSC Contact Centre at 1-877-785-1555.
Can you verify the investment with a credible source?
If you receive an unsolicited investment opportunity, get a second opinion from your registered financial adviser, lawyer or accountant, or call the OSC Contact Centre for assistance.
If you are promised a guaranteed return, is the guarantee given by a reputable financial institution?
Ask for proof of the guarantee in writing and confirm that guarantee is legitimate. Remember, a guarantee is only as good as the person or company offering it.
Is the risk you are taking reasonable for the expected return?
In general, returns on low-risk investments are in the range of current GIC rates offered by banks. If the expected return is higher than these rates, you are taking a greater risk with your money. Make sure you understand and can afford the amount of risk you’re taking on.
Do you understand how the investment works?
If you don’t understand the investment, don’t invest in it.
Have you had enough time to make a decision?
Don’t give in to high-pressure sales tactics like limited time offers. Take your time making investment decisions and never sign documents you have not read carefully.