Ontario Securities Commission Warns Against Phantom Regulators

by Phillip Morton, Investors Offshore.com

02 September 2005

The Ontario Securities Commission has warned investors in North America and beyond to be on their guard for so-called 'phantom regulators,' which purport to be legitimate financial regulatory bodies, but which are in the business of stealing investors' personal information and also their money.

The OSC has identified a number of websites that gather personal information, under the pretense that they represent international securities regulators or government agencies. Some of these sites actively encourage investors to submit their questions and complaints, and claim to pass them on to the appropriate regulator worldwide. In fact, these sites may collect information about your investment habits in order to lure you into fraudulent investment schemes.

The North American Securities Administrators Association (NASAA) recently announced that several “phantom regulators’, including U.S.-based operations that target investors worldwide, have been brought to the attention of U.S. securities regulators In some of these cases, criminals were using the “phantom regulators” to endorse fraudulent investment opportunities.

According to the OSC, tell tale signs that a so-called regulatory body may be fraudulent include:

• No references to the organization on any other regulatory websites and legitimate regulators have never heard of them.
• Endorsement or promotion of any particular investment opportunity – a legitimate regulator would not do this.
• Claims that paying a fee to “release restricted shares” is not an attempt to steal your savings. This is a common ploy, and a recent twist on age-old advance fee schemes.

The OSC advises Canadian investors to check with securities regulators in their province or territory to confirm the legitimacy of a regulator. Investors in American jurisdictions should contact the North American Securities Administrators while investors from other parts of the world can check the members list on the International Organization of Securities Commission’s website.

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