NASAA’s Annual List of Top Five Investor Threats

Every year, the North American Securities Administrators Association (NASAA) releases an annual list of the top five threats to investors.

NASAA determines its list by surveying state and provincial securities regulators to find out what products and schemes have been the most harmful to investors. Below are NASAA’s top five threats, which are linked to some helpful BCSC InvestRight resources and information:

  1. Unregistered Products/Unlicensed Sales People: One of the biggest threats regulators see is unregistered individuals who attempt to sell securities and/or try to sell unregistered investment products. The BCSC encourages investors to always check the registration and disciplinary status of someone offering an investment.
  2. Promissory Note Schemes: Promissory notes can be used as a legitimate means to raise capital, but they are offered almost exclusively to corporate or sophisticated investors who have the capacity to do thorough research on the offering company. Fraudulent promissory notes tend to offer high returns with little to no risk and often guarantee the principal, which legitimate notes do not do. Find out more about other schemes on InvestRight in the Common Scams section.
  3. Oil & Gas Investments: Oil and gas investment schemes often take advantage of investor enthusiasm during an oil boom period. Promoters of the scheme will cold call or email investors with a promising opportunity to get involved in an oil and gas limited partnership. Investors may be shown fake reports or told that a large oil and gas company has also invested to help ensure peace of mind. Once money is invested in the scam, it is unlikely that investors will get it back.
  4. Real Estate-related Investments: In illegitimate schemes, the value of the property may be inflated to attract investors or the property may not exist at all. Investors are also often charged high fees and given little information regarding details of the investment or disclosure of risks. The BCSC issued an Investor Watch on investing in real estate.
  5. Ponzi Schemes: The premise of a Ponzi scheme is simple: initial investors are lured into the scheme and told they can grow their money by recruiting additional investors. Early investors are paid with the money raised by later investors, until the scheme eventually collapses. The only people who benefit from the scheme are those running it. Watch David, the fraudster from our advertising campaign, explain Ponzi Schemes in this short video.

You will find more information on common scams and their warning signs by visiting the Fraud Awareness section of the BCSC’s InvestRight website.

If you believe that you’ve been approached with fraudulent investment, please contact BCSC Inquiries at 604-899-6854, toll free at 1-800-373-6393, or by email at [email protected]. You can also file a complaint anonymously by using our Report a Scam form.