You’ve got to understand,” said the voice on the other end of the telephone. “Typically, I don’t make these type of calls. I’ve got people to do that. I’ve got 11 years in this business and worked my way up to senior vice president with 400 clients and $40 million dollars under management. I don’t need this account, but I want it.”
So says a caller trying to close a deal for an unknown stock by bragging of his accomplishments. But it was all a lie. He was merely reading from a script his employer had written.
“Perhaps a return of 100 percent in 20 minutes sounds a bit unrealistic,” the scam artist read from another script. “But that’s exactly how all our initial public offerings trade. We did three deals last year yielding collectively 34 points within the first ten days of trading. That’s a fact! All I ask for is your vote of confidence this one time. I won’t let you down.”
Taken from an actual script seized by securities regulators, these scenes showcase the danger faced by investors who purchase shares of stock in unknown companies over the phone from people they do not know. Unfortunately, far too many investors are falling for the lure of these “too good to be true” scams. And the telemarketers, playing upon people’s desire for ever-greater financial returns, have been running away with millions of dollars of hard-earned money.
The best way to avoid becoming a victim is to ask questions. Start by asking if the caller is registered to do business in your province. And how they got your phone number. Ask why this stock is a good investment for you, and your specific situation. Ask what risks might be involved. Where is the company traded?(You can then investigate its trading history. Make phone calls. Find out more about it.) Will they send you a prospectus? (They are legally required to.)
Don’t let someone force you into a quick decision. Take your time. Check with the Canadian Securities Administrators National Registration Search. Call the Nova Scotia Securities Commission (or your local regulator). Ask about the record of the firm and its representative. Are there any past disciplinary events? This information is available if you only ask.
With information from the North American Securities Administrators Association.Related posts:
- Are you vulnerable to investment fraud? There is no “typical” victim of fraud. Professional scam artists...
- Investment Fraud Checklist Most investing scams have some common warning signs that are...
- New website for the Canadian Anti Fraud Centre The Canadian Anti-Fraud Centre estimates that between $10 and $30...
- “Boiler room” scams: Could you be vulnerable? Have you received an unsolicited phone call about an investment...
- Entertainment Investments – Top 10 Investor Traps of 2009 As promised last week, we are going to take a...
Share & Bookmark This Story!
Bookmark on Delicious 
StumbleUpon 
Google Bookmarks
Tip'd
Financial Post Headlines
{ 0 comments… add one now }