Nova Scotia Securities Commission, Investor Education

Investor Education

The Nova Scotia Securities Commission is pleased to provide you with information to assist with making informed investment decisions. We hope that you find the information in this section of the website to be of value and welcome your comments or questions.

Under the link for 'Brochures' you can view and download our informative publications or use the order form to order hard copies. Read our 'Investment Frauds and Scams' section to find out some of the ways people are conned into bad investment schemes. There is also a link to current scams which are operating.

'Resource Links' provides you with a host of options to obtain additional financial information including money management and contests which are fun and educational. The 'Young Investor' section is specifically intended to provide financial guidance to our youth through resource links, book suggestions and fun contests.

For additional information regarding Investor Education please contact:

Natalie MacLellan
Investor Education Officer
Nova Scotia Securities Commission
1809 Barrington St., Ste. 501
PO Box 451
Halifax N.S., B3J 2P8
(902) 424-8586
maclelnj@gov.ns.ca

Brochures

Brochures may be requested with the Brochure Order Form. Brochures will be mailed to you.

Investment Frauds and Scams

Current Investment Scams

Be Aware of the Warning Signs - Common Characteristics of Frauds and Scams:

You are guaranteed a high return with little or no risk
There is a cap on the maximum amount of participation
Secretive behaviour
You must make a quick decision or the opportunity will be lost
Additional pressure tactics
The request is for a small amount of money hoping the person contacted won't notice, doesn't care or won't do anything about it
Information on the investment is never mailed to you
Promises of legitimacy are made
You are overloaded with information to create confusion
There is a request to sign blank documents
Behaving as if they know you and you can trust this person
Investment sounds too good to be true

Listen to your instincts. If an investment sounds too good to be true, then most likely it is too good to be true.

Common types of Frauds and Scams:

West African Letter Scam - Letters and/or e-mails are sent from what appear to be high-ranking government officials from a developing country. They claim that they have access to large sums of money and require assistance in getting the money out of their country. All they need from you is your bank account number so that they can transfer the money and in return, they offer a thank you gift of a portion of this money. The individuals then empty the bank account and are never heard from again.
Affinity Fraud - This fraud occurs in a group setting such as ethnic groups, sports associations, religious groups and social clubs. Scammers will establish credibility by joining groups where they can share common interests. Once trust is gained, they'll ask if anyone is interested in investing but ask that you keep the information secret because it's such a great opportunity. Once the scammer collects money from individuals in the group, they disappear.
Boiler Room Scams - These scams are called "boiler room scams" because the con artists who call to offer you a "once in a lifetime deal" are usually calling from a room, called a "boiler room", filled with other con artists on the phone doing exactly the same thing. These scams involve individuals placing calls to people claiming to represent a brokerage house. They use high-pressure sales tactics, while offering investors an exceptional deal on stock. The group working the boiler room typically owns most, or all of the stock, which it actively promotes to drive the price up. Once the group has sold all of its holdings, it discontinues promoting the stock. The price of the stock then falls drastically and you lose your money.
Ponzi Scheme - Also known as a "pyramid scheme" because the people who invest first are at the top of the "pyramid". They make their money by encouraging participants to recruit more investors to the scheme. There is no actual investment; money from previous investors is used to pay new investors to make it appear as if money is being made. The people who join the scheme later on and make up the bottom of the "pyramid", lose out when the scheme runs out of new investors.
Promissory Notes - Often sold as insurance products, these are short term loans that promise high returns for borrowing money from you at no risk. The companies offering the 'investments' are usually non-existent. Once they have your money, you never hear from them again.

Resource Links

Young Investors

Books

Parents

Making Allowances: A Dollars and sense Guide to teaching Kids About Money: Lermitte, Paul. McGraw-Hill, 2002. ISBN 0071398287
Money Doesn't Grow on Trees: A Parent's Guide to Raising Financially Responsible Children: Godfrey, Neale S. Fireside, 1994. ISBN 0671798057
Raising Money Smart Kids: What They Need to Know About Money and How to tell Them: Bodnar, Janet. Dearborn Trade, 2005. ISBN 1419505165
Money Sense For Kids: Hollis Page, Harman. Barrons Ednl Series, 2004. ISBN 0764128949

Kids

The Toothpaste Millionaire: Merrill, Jean. Houghton Mifflin Company, 1999. ISBN 0395960630
Amelia Works It Out: Moss, Marissa. Pleasant Company Publications, 2000. ISBN1584850809
Ultimate Kids Money Book: Godfrey, Neale S. Simon & Schuster, 2002. ISBN 0689814895