You’ve been offered an investment opportunity? Does it seem too good to be true?
In general, the higher the anticipated return on an investment, the greater the risk you must be prepared to assume. This is a basic investment rule. You should think twice if you’re told that you’ll earn a higher return, without any risk, compared with other offers on the market.
There are a number of investment fraud strategies. Here are a few of them.
International fraud: HYIP and prime bank fraud
HYIP (High-Yield Investment Programs) and prime bank fraud mislead investors into believing that certain investments on international markets will allow them to make a lot of money. In reality, these investments and their markets don’t exist.
There are ways for you to avoid this type of fraud. For example, don’t invest if you’re asked to keep the information secret.
OTC market fraud
Over-the-counter markets (also known as “OTC markets” or “Pink Sheets”) are marketplaces for buying and selling securities issued by small companies. Generally, these securities are not frequently traded and they have little liquidity. Often, they are valued at less than a dollar, hence the name “penny stocks.”
Some investors are taken in by fraudsters’ slick talk and their promises of high returns with penny stocks. Be careful! Learn to limit the risk of over-the-counter market fraud.
Is your RRSP being targeted by a fraudster?
Have you been promised amazing performance from your RRSP? Are you being urged to transfer your RRSP funds into investments that are “more profitable” yet still RRSP-eligible? Be wary when people make enticing promises. A few simple rules can help you avoid a fraudster’s empty offers.
Classified ad fraud
Scammers can take advantage of your financial troubles. They offer you their so-called expertise to conduct transactions in your name, for example, in your RRSP. Watch out, as fraudsters use various tactics to trap their victims. Learn more about classified ad fraud.