The New Brunswick Securities Commission has launched a toll-free tip line for investors to alert it to possible investment scams.

The NBSC says it wants to raise public awareness about investment fraud. With that goal in mind, it is launching a toll-free phone number and awareness campaign as part of its ongoing investor protection mandate.

“We are the place to call to report unfair, improper or fraudulent investment practices”, states Rick Hancox, executive director of NBSC. The commission says that investors need to be cautious when presented with investment opportunities that sound too good to be true; are presented as being tax-free; sheltered in an off-shore company or bank; do not issue account statements or issue share certificates in a company name different from that being promoted. These are all red flags for potential investment traps.

Some scams involve a phone pitch for what sounds like a great investment in a ‘hot’ industry, it adds. “The person soliciting the investment may claim the value of the offered shares will increase or that the company will soon be publicly traded on the stock exchange. It is illegal to make representations with respect to the future value of shares, or the company’s potential public listing,” it notes.

The NBSC says that seniors, or those soon to retire, are also popular targets for investment scams. It reports that one scam in the Saint John area specifically targeted the elderly and resulted in significant losses for the victims. “They invested hundreds of thousands of dollars in an ‘offshore company’ and were lead to believe that the interest earned wasn’t taxable,” says Hancox. Aside from the fact that the investment was not legitimate, the ‘fine print’ revealed that the money invested was locked in for 35 years. This meant that some of the investors would have to wait until they were 115 years old before their investment could be realized.

“Most people are often embarrassed to report this type of activity for fear of what their family or friends will think, particularly if they have encouraged others to make the same investment” says Hancox. “Don’t let embarrassment or fear keep you from reporting investment fraud or abuse”.

The commission says that it is essential for investors to do their homework before handing over their money to anyone, whether it is a stranger, neighbour or friend. “Notwithstanding the fact that the vast majority of investments and professionals in the industry are legitimate, it is still very important for investors to ask specific questions when being offered any investment,” it cautions.

“Registration and prospectus requirements exist to protect investors, but there are exceptions to these requirements in certain circumstances. New Brunswickers should find out whether their investment has registration or filing requirements, or if it qualifies for an exemption, before laying down their money,” it says. To learn more about the questions investors should ask before investing, the NBSC invites investors to visit its website and click “Invest in Knowing More”.