5 Tips for Protecting your Money Against Investment Fraud


  1. If it sounds too good to be true, it likely is

Although it would be ideal if the investments that tout zero to no risk and high returns were legitimate, more often than not they are carefully orchestrated scams that ultimately will only benefit the scammer. If an investment opportunity is presented to you in a way that suggests that the low/no risk and high returns are possible because of the person’s access to an exclusive opportunity or because of their access to confidential information, this should be seen as a huge red flag.

  1. Do your research

Doing your own due diligence prior to investing is one of the best ways to protect your money from going into illegitimate investments. Do not make any decisions about investing until you have done your homework for both the investment itself as well as for the individual offering you the investment opportunity, especially if they were the ones that initially approached you as opposed to vice versa.  Consult with trusted advisors and take your time in conducting your research.  Being rushed to make a decision and efforts to have you avoid consulting with advisors are warning signs you should not ignore.

  1. Don’t be a sheep

Many people feel a false sense of security about investments that their friends and/or family have invested in because they see this participation as reassurance that the investment is safe. Investing in opportunities simply because others close to you have done so can be dangerous.  That other people have had positive experiences with an investment is a factor to consider but it should not be the only factor you consider and it is not a substitute for your own research.

  1. Clarity is Key

If the person attempting to get you to invest with them cannot clearly explain how they expect the investment to make a return or how their business opportunity will make money, this is another worrisome red flag. Avoid investment opportunities where any of part of it is unclear or where complicated, technical jargon is used without clarification when requested.

  1. Don’t Ignore Warning Signs

Pressuring investors to commit quickly due to supposedly short windows of opportunity is a common tactic used by investment fraudsters that prevents investors from carefully thinking through their decisions. Take the time that you need to feel comfortable about your investment decisions, without succumbing to the pressure of others.  This will help you detect warning signs.  If you invest, stay alert to warning signs.  Too many people pour even more money into bad investments because they ignore warning signs after making the investment.

Should you become the victim of or suspect you are the victim of investment fraud, seek legal counsel who can advise you on how to proceed, which may include filing a complaint with the British Columbia Securities Commission.

Hakemi & Ridgedale LLP is a Vancouver law firm that advises clients in commercial disputes and regulatory proceedings, among other areas. Our lawyers have experience representing clients in a broad range of issues, including securities and investment fraud.

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