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A global trend of online investment scams is robbing Albertans of their “hard-earned money,” says the Alberta Securities Commission (ASC)’s director of Enforcement.
“Starting early in the pandemic, we saw a huge proliferation in online investment scams, not just in Alberta or Canada, but globally, and they’re not going away,” said Cynthia Campbell, announcing the launch of a new tool, a public “investment caution list” published on the ASC website.
The warning list will name unregistered individuals and companies “that appear to be engaging in activities that either require registration… or may be investment scams,” Alberta’s top securities enforcer told this year’s ASC Connect conference.
Now in its sixth year, ASC Connect brings capital market participants together to discuss critical issues and evolving trends affecting Alberta’s economy and capital market. More than 700 people registered for this year’s conference including c-suite executives, small business owners, entrepreneurs, corporate lawyers, brokers, advisors, investors and other industry experts.
Campbell, who was part of the opening panel “Catching up with the ASC”, warned of two popular online investment scams: website clonings and crypto schemes.
“We commonly see scam artists use pop-up ads and other means to guide an investor online to a fake crypto asset trading platform website and encourage them to invest there. Scammers may also convince investors to grant them access to their crypto wallets, or to send them crypto through legitimate trading platforms,” she said in an enforcement update, which included recent sanctions decisions.
In a landmark case, the ASC banned an individual from trading for eight years and issued a $40,000 penalty after determining securities were illegally distributed to trade crypto assets. The ASC found that because the securities were distributed to the public, the private investment club exemption was not available. Significantly, the regulator ordered the individual to pay another $125,000 for the cost of the hearing and investigation after determining the individual employed “a strategy” that prolonged the hearing and increased costs.
The individual “took advantage of FOMO (Fear Of Missing Out) with respect to cryptocurrency investments,” said Campbell. “Ultimately, the trading did not generate any profits and investors received only a small portion of their initial investment, resulting in the loss of thousands of dollars.”
Joining Campbell from the ASC was Stan Magidson, Chair and CEO, Patricia Quinton-Campbell, Manager, Legal, Market Regulation and Denise Weeres, Director, Corporate Finance. The panel was moderated by Hilary McMeekin, Director, Communications and Investor Education.
Other key takeaways included:
- The Canadian Securities Administrators (CSA) is modernizing its legacy SEDAR electronic filing and data access system. SEDAR will be replaced with SEDAR + over the next several years beginning with phase 1 of the roll out in June 2023.
- The ASC’s corporate finance energy group is expanding beyond its oil and gas expertise to include all things energy – including, but not limited to, solar and wind projects, carbon capture and storage, helium and hydrogen production.
- There is continued effort to clarify expectations for issuers regarding environmental, social and governance (ESG) reporting, including climate-related disclosure. “Increasingly investors are looking for more consistent and comparable disclosure regarding the impacts of climate change,” said Denise Weeres. “We have been consulting, considering market feedback and the impacts of international developments on the rule we proposed in Canada in October 2021.”
- Recognizing the hot and timely topic of crypto, the ASC and other members of the CSA are developing policy, registration and compliance requirements, and terms and conditions while also working to register crypto-asset trading platforms.
- Magidson has taken on the additional role of chair of the CSA. One of his priorities in the national role will be to give an increased voice to the retail investor when it comes to policy making. “The Investor Advisory Panel will bring retail investor perspectives forward,” he said.
- Magidson said another focus of a new CSA business plan is to continue improving investor protection. One particular project is related to the Ombudsman for Banking Services and Investments (OBSI). Investors currently seek redress through OBSI; however, decisions aren’t binding. “So, we are looking into providing OBSI binding decision-making authority,” he said. Putting more teeth into OBSI would be a cost-effective and efficient way of getting redress, and bring Canada more in line with other jurisdictions.
To watch this session, or any of the other panel discussions, ASC Connect 2022 is available for playback at the ASC website
