Schemes related to these products were identified as the top threats facing investors this year in a survey by the North American Securities Administrators Association (NASAA), of which the OSC is a member. The survey includes responses of enforcement officials with state and provincial securities regulators throughout the United States, Canada and Mexico.
The survey found fraudulent internet- or social media-based frauds as the top threat to investors. Ranked second are cryptocurrency-related and precious metals-based investments, especially those purchased through self-directed individual retirement accounts, which lack the services and protection of traditional IRAs and can be fertile soil for scammers. Foreign exchange-related schemes rounded out the top three threats. Enforcement officials expect to see a resurgence of high-yield foreign exchange and cryptocurrency-related schemes targeting investors this year disguised as membership or investment programs.
The NASAA survey also indicated that 82 percent of state and provincial securities regulators anticipate that bad actors will continue to attempt to leverage on investor fear and anxiety related to changes in financial markets and the economy due to COVID-19 to illegally sell securities this year.
“Fraudsters will always try to leverage vulnerabilities wherever they can be found. Investors may be lured by the promise of high returns as a way to supplement income lost as a result of the pandemic,” said Securities Commissioner Ty Nohara.
Investment offers that sound “too good to be true” often share similar characteristics. The most common telltale sign of an investment scam is an offer of guaranteed high returns with no risk. All investments carry the risk that some, or all, of the invested funds could be lost.
Nohara recommends that investors always ask if the salesperson and the investment itself are properly registered. This information can be confirmed by the OSC or online at https://brokercheck.finra.org/.
To check the registration of the investment or the person offering it, contact the OSC’s Securities Compliance Branch at (808) 586-2722 or email sc@dcca.hawaii.gov.
To report investment fraud, contact the OSC’s Securities Enforcement Branch at (808) 586-2740, toll free at 1-877-HI SCAMS or email seb@dcca.hawaii.gov. To file a complaint or report a tip through the Securities Online Portal, visit https://dccabreg.force.com/securities/s/.
For more investor protection information and resources, visit the OSC’s Investor Education Program website at https://cca.hawaii.gov/sec/iep/.