Any advisor who advises or trades in securities such as mutual funds,
stocks, and bonds must be registered with the relevant securities regulatory authority in
the Province or Territory in which the advisor’s clients reside. You should check an
advisor’s registration before you open an account and provide your personal information by
using the National Registration Search Tool at www.aretheyregistered.ca. A person whose
name does not appear in the search cannot trade or advise on securities, and you should not
deal with such a person for these purposes.
You should never lend money to your advisor. Unacceptable loans
include personal loans to the advisor and loans solicited by the advisor for personal
business ventures. If an advisor ever asks you for a loan, or if you have lent money to an
advisor in the past, you should report this fact to the advisor’s dealer immediately.
You should never provide confidential or personal information to
someone over the phone unless you know the person you are dealing with. In particular, you
should never deal with individuals who call you and use high pressure sales tactics and ask
for information such as your name, date of birth, social insurance number or credit card
number. Additionally, you should never provide confidential or personal information over
unsecure email. Unsecure email can be intercepted by third parties or redirected to unknown
individuals without your knowledge. A good practice to protect yourself when providing
personal information to your advisor is to use secure methods such as by providing the
information in-person at a business location, over the phone where you have initiated the
call, or over a secure digital portal.
Receiving a telephone call or email from a person attempting
to sell you an investment that you do not know is a red flag. When making an
investment you should only deal with an advisor that you are familiar with, or a
representative from a dealer where you already have an account or business relationship.
Always check the registration of an individual before you open an account and invest. You
can check whether a person is properly registered to trade in securities such as mutual
funds, stocks, and bonds at www.aretheyregistered.ca. A person whose name does not appear in
the search cannot trade or advise on securities, and you should not deal with such a person
for these purposes.
Do not invest money if you feel that you are being pressured
to invest. Fraudsters often use high-pressure sales tactics in order to coerce
individuals into investing in their fraudulent products. One technique used to pressure
individuals involves limiting the time that an investment is available for purchase. This
creates pressure on a person to purchase and limits their ability to think things through
and make a considered decision. A time-limited investment should be considered a red flag,
especially if the time limit is very short. For example, if you are told that an opportunity
to invest is only available for a few hours it is highly likely to be fraudulent.
MFDA rules prohibited mutual fund advisors from acting upon any power
of attorney or similar authorization. You should never name your mutual fund advisor
as your power of attorney or an executor in your will because it is contrary to
MFDA rules, and may put your advisor in an irreconcilable conflict of interest. When
selecting a person to act under a power of attorney or as an executor, it is best to consult
with a lawyer, notary or another professional who deals in estate matters.
You should never sign a blank form. When a blank form
is signed it affects the integrity and reliability of documents and destroys necessary audit
trails. Signing a blank form poses similar risks to signing a blank cheque, which is
something most Canadians would never do. The MFDA has prosecuted cases where blank signed
forms were used by advisors to commit fraud.
Investors who travel frequently or
reside out-of-country for large portions of the year may be concerned about processing
trades while away, but signing a blank form is not the solution. If you are concerned about
processing trades while you are away, speak to your advisor about the proper procedure that
can be used so that your advisor can accept your verbal instructions.
Federal, Provincial and Territorial Government Services for Seniors