AdWatch
AdWatch is a province-wide system of volunteers who review daily and community newspapers for suspicious advertisements in an effort to prevent stock fraud and other violations of the Securities Act of British Columbia.
Over the past year, a significant number of the advertisements identified by AdWatch volunteers led to formal and informal intervention by the NCSC or were referred to other agencies in Canada and the United States.
The British Columbia Securities Commission (BCSC) is responsible for the regulation of the securities industry in British Columbia. That means the BCSC can only investigate matters that involve securities (i.e. stocks, investments, etc.). The BCSC cannot investigate advertisements that relate to work-at-home schemes, franchises or vending routes. The advertisements that are most likely to be investigated by the BCSC contain key words such as:
- investment or investor
- RRSP or RRIF
- shares or stocks
- a rate of return (i.e. 14%)
- return on investment (or ROI)
- guaranteed return
- offering memorandum (or OM)
- trade, trader or trading
Early detection does not just protect investors. The AdWatch program has also identified regular business people who were simply making a mistake. The BCSC was able to provide these people with information to help them comply with the rules before there were any serious consequences.
A Warning About Email
Spam is a term used to refer to un-solicited e-mail messages. Spam is full of offers for “great deals” on everything from mortgage rates to prescription medicine. Spam often offers a path to easy riches. Sometimes, these promises come in the form of information about a publicly traded company.
This type of spam often include unsupported share price predictions or “hot tips” about important news that has not been publicly disclosed. Cyber-schemers may be using the spam to help artificially run-up the price of shares in a company. What the cyber-schemers don’t tell you is that the vast majority of shares are held by a small group of people who are behind the hype and promotion. As investors rush to the market to “get in on the ground floor” the inside group cashes in, selling their cheap shares into the rising market. The share price then collapses and investors are left with significant losses.
These hot tips are seldom, if ever, true. If you receive a “hot tip” by e-mail, remember to ask these important questions:
Always evaluate the information you get on-line in the same way that you would a whispered tip from a stranger. Exercise healthy skepticism and remember that the best approach to spam is to delete it!
Visit the BCSC web site at www.bcsc.bc.ca for more information on investing and the Internet.
