Alberta Securities Commission Highlights Top Investment Risks for 2021

COVID-19 pandemic related scams on the rise

CALGARY – As Albertans set their financial intentions for the year ahead, it’s important to take the steps necessary to ensure an investment is right for you, and to get informed about how to protect yourself from scam artists. To help empower Albertans, the Alberta Securities Commission (ASC) has released its list of the top investment risks and possible scams to look out for in 2021.

“We want to empower and inform Albertans to make the right investment choices for them and to protect themselves from fraudsters who are constantly looking for ways to prey on people’s vulnerabilities,” said Hilary McMeekin, Director, Communications and Investor Education. “This list will arm Albertans with timely information to stay vigilant and protect their finances as we enter 2021.”

The list is based on investor complaints, ongoing investigations and current enforcement trends, as identified by the ASC’s Enforcement division. The ASC’s top investment risks for 2021 include:

Investments related to COVID-19 – “We have a cure.”

Fraudsters take advantage of global events, exploiting the latest crisis to lure potential investors. A common way they do this is through pump-and-dump schemes, which promise an opportunity to invest in new products or services that will prevent, detect or cure COVID-19 or otherwise aid in the fight against this pandemic. These types of pump and dump schemes usually involve artificially inflating the price of a penny stock shell company through issuing false and misleading positive statements. The price of the stock rises as people invest. However, the wrongdoers cash out their stock at a high price before the truth is revealed and the price of the stock falls dramatically – leaving investors with nothing. When investing, do your own homework and carefully research the company and the investment. Make sure you are comfortable with the risk associated with the investment you are considering. 

Excitement around new and emerging industries – “Don’t miss out on this opportunity!”

In addition to global events, scam artists will often build investment schemes around the latest trends, capitalizing on the hype and investor excitement. There is limited information and history available around these emerging industries, making it easier to promote the investment and spread false information. The ASC has seen similar scams, misconduct and tactics with industries such as cannabis and foreign exchange where fraudsters provided misleading or false information, over-promoting the company’s value, deals and/or future expectations. As with any investment, it is important to research a new industry and understand the risks associated with the business before investing your hard-earned money.

Great expectations – “We’re going to sign a big deal that will make huge gains for investors.”

The ASC is seeing an increase in situations where investment is encouraged with the promise of high returns resulting from a proposed deal involving a letter of intent. Proposed deals can fall through, so if its being promoted as a sure thing, investors should be wary. Potential investors should research the company, the promoted deal and the parties involved. Be sure you understand and feel comfortable with the risks associated with the opportunity and your investment.

Affinity fraud – “I know the guy, so I’m sure the investment is good.”

Always a favourite of scam artists, affinity fraud happens when victims are introduced to scams by someone they know like family members, friends or co-workers. Fraudsters will often target ethnic communities, religious organizations, social clubs or professional groups, taking advantage of the trust and relationships that exist within. The fraudster becomes part of – or pretends to be part of – the community, flaunting their success or wealth and often enlisting unsuspecting ambassadors to spread the scheme to make it seem credible. Friends and family may unknowingly fall victim and encourage others to invest, too. When it comes to your money, the best decisions are informed ones. You should always err on the side of caution, do your own research and check the registration of anyone selling an opportunity before giving away your money.

Not qualified to sell securities – “Registration isn’t required for the products I’m offering.”

Generally anyone offering investments in Alberta must be registered with the ASC. Despite this, the ASC continues to receive reports of non-registered individuals selling investments. Lack of registration is a key red flag of fraud, yet three-in-five Albertans have never checked into the background of their financial advisori. Registration of any adviser or organization can be verified by visiting the ASC’s consumer website

Training at a cost – “You can easily make money trading stocks at home.”

The COVID-19 pandemic has severely impacted people’s employment and livelihoods. During this difficult time, scam artists are preying on people’s fears by using fraudulent ads that promote opportunities to work from home as day traders in the financial markets. These ads typically claim that you will be trained on trading stocks or forex (foreign exchange) for a fee. They also state that traders can keep a large percentage of the profits, get high rates of return with little or no risk, and that no experience or licence is needed. Often, the firms offering these services are not legitimate and exist only to steal your money. Albertans should be aware that trading on the stock exchange or foreign-exchange market is inherently high-risk and complicated. Importantly, individuals need to be registered to trade securities.

The ASC encourages Albertans to watch out for the red flags of fraud and report any suspicious investments to its public inquiries office. A wealth of free and easy-to-use resources to build financial knowledge and tools to recognize and avoid investment fraud are available on the ASC’s website, This includes monthly articles, fact sheets and informational videos, quizzes on investing basics, and the new Fraudster’s Playbook “Don’t be Fooled by Fraud” which outlines the steps scam artists take and how to recognize and avoid them.

The ASC’s Enforcement division uncovers, investigates, and prosecutes breaches of securities laws with the objective of both stopping and preventing misconduct. Through proactive, fair, and visible enforcement action locally, and through collaboration with other securities regulators and police forces, Canadian and foreign, the ASC seeks to foster investor confidence and promote the integrity of Alberta’s capital market, thereby protecting the investing public.

The ASC is the regulatory agency responsible for administering the province’s securities laws. It is entrusted to foster a fair and efficient capital market in Alberta and to protect investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada’s capital markets.

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i2018 Alberta Investor Study, Alberta Securities Commission.

For further information please contact:

For Media Inquiries:

For Investor Inquiries:

Leanna Kruk
Brookline Public Relations

ASC Public Inquiries
Toll Free: 1-877-355-4488

Source: Alberta Securities Commission