With the RRSP deadline creeping up (it’s February 29), many of us are trying to figure out where to put our contribution. Historically low interest rates, lacklustre returns, and protracted stock-market volatility make this decision even more difficult.
Unfortunately, the uncertainty of today’s economic climate presents another challenge for RRSP investors – it is ideally suited to investment fraud.
There are unlimited opportunities to target investors by promising quick, solid returns with little or no risk. This pitch is the calling card of almost every fraud artist.
So, before rushing into an RRSP investment, you need to do some research about the person you are dealing with and the investment you are considering. You can use several free tools provided by Canadian securities regulators.
- The National Registration Search contains the names of all registrants (individuals and firms) in Canada, with the exception of those registered solely with the Ontario Securities Commission. If the person you are dealing with does not hold registration in BC, call us at 1-800-373-6393.
Check disciplinary history
- The CSA’s Disciplined Persons List contains information relating to persons that regulators in Canada have disciplined. If you find the person you are dealing with on this list, read the supporting documents carefully. If the person was sanctioned for fraud, illegal distributions, or other significant violations, you would be wise to invest your money elsewhere.
Check for unqualified investments or unregistered firms
- Among other things, the BCSC’s Investment Caution List provides investors with the names of unregistered brokerage firms and businesses outside BC that have unqualified investments. This list is not exhaustive. If the firm you are dealing with, or the investment you are considering is on this list, call us immediately.
Check out private placements and real estate investments
- Read the “private company investing” section of our website to get a better understanding of this type of investment. If the investment is in real estate, you should also look at our recent Investor Watch on the topic.
At this time of year, it can be difficult to resist an investment opportunity, especially when you are up against a hard deadline. However, it is not worth handing your RRSP contribution to someone you haven’t checked out, or putting your money into an unsuitable or fraudulent investment.
There are a lot of lessons to be learned from reading the Canadian Securities Administrators’ 2010 Enforcement Report. Read, for example, the Alberta case called Kustom Design Financial Services Inc. This is a company which held seminars supposedly offering financial education. It was, instead, a cover for the illegal selling of securities to vulnerable investors. […]