Investigate before you invest
Always take the time to evaluate each investment before buying it. This will help you avoid scams and ensure each investment is right for you. In general, you are looking for investments that have the right mix of risk and reward for you—not for your friend or relative.
Know who you are dealing with
You wouldn't hire somebody who couldn't produce qualifications for the job or evidence of their previous experience, would you? No, you would ask for references and you would check them out. Once you decided whom to hire, you would make your expectations very clear. You would monitor his or her performance. In short, you would manage your employee and not let your employee manage you. With that in mind, you should take all the same steps when you select an investment advisor. Take time to get to know the individual who is offering to manage your finances or sell you an investment.
Before you invest with anyone, check them out:
- Look at the CSA's Disciplined Person's List. Find individuals who have been sanctioned in BC and elsewhere in Canada. If the person you are dealing with is on the list, ask questions or call the BCSC.
- Check to see if they are registered on the National Registration Search database. Are they registered to sell securities? If not, you need to ask more questions and investigate further.
- Search the BCSC’s Decisions and Orders. Has this person been subject of a cease trade order? If so, you will want to know what type of order it was and why it was issued.
- Check the internet. Do your own internet searches on the person selling you the investment. It’s amazing what you may find out.
- Read our Investor Alerts. Look here to see if the person or investment a person is selling sounds like something that we have warned investors about.
- Be cautious. If the salesperson does not ask you questions about your past investment experience and how much risk you can handle, it is a warning that they may not be looking out for your best interests.
- Get in touch with your local Better Business Bureau. Ask if they have any complaints on file for the venture's promoters or principals. Some con artists have run business scams in the past.
You can also visit the Work with an advisor section to find out more.
Understand an investment opportunity
It’s easy to say ‘Investigate before you invest’ but how is it done? Where can you look to find out more about an investment you’re offered? You wouldn’t invest your life savings in an investment you found on your grocery store bulletin board, would you? So exercise care in selecting your investments.
Do some research:
- Review the Investment Caution List. The BCSC publishes this list to inform investors of unregistered activity or unqualified investments it has learned about from the public or other agencies.
- Look at the national cease trade order (CTO) database. An order against a company prohibits residents in the province where the CTO was issued from trading in the securities of that company.
- Check Sedar.com. This is an excellent starting point for finding information on any public companies registered in Canada.
- Check the internet. Do your own internet searches on the company selling you the investment.
- Use independent, dependable sources. Stock information you find in chat rooms or on the internet can be exaggerated or completely wrong.
- Have an independent expert, such as a lawyer or an accountant, review the investment. Even if you pay for the advice it will be worth it if it helps you avoid being scammed. You may be saving yourself from investing in a scam where you could lose thousands.
Look at our Common investment schemes to better understand the types of investments scam artists promote. The Fraud warning signs section is also a good place to visit, to get a sense of the warning signs of an investment scheme.
Make sure the investment fits
It is important to be able decide what investments are suitable for you. If you are confused or feeling pressure to purchase an investment, you need to be strong and resist handing over your money until you do some more research. You may also find that your unwillingness to invest causes the person to move on, which could be a sign that the investment was a scam after all.
Get some help:
- Hire or consult with a registered, professional advisor
- Use the BCSC Guide to Investing: How to make informed investment decisions
- Take a course. The Canadian Securities Institute offers courses to help you learn to make sense of a complex financial world
- Do some independent learning. Surf the web or consult books to learn more about the basics of investing
The more knowledge you have, the better questions you will ask. You are also less likely to be conned by someone who uses terms they think you might not understand.
Questions or concerns?
You can also contact your local securities regulator if you have questions about an investment or and advisor.
In BC, contact BCSC Inquiries. You can also anonymously report suspicious activity through InvestRight’s Report a scam webpage.
Residents from other Canadian provinces can find contact information for their provincial securities regulator at