Securities taskforce disrupts 250 pandemic investment scams

Fraudsters have been quick to target investors during the pandemic but the authorities are on to them

Securities taskforce disrupts 250 pandemic investment scams
Steve Randall

The organization that brings together securities regulators from Canada, Mexico, and the US, has reiterated its warning to investors about pandemic-related investment scams.

With the holidays approaching, investors may be tempted by investments offered online and act without consulting with their financial advisor.

A report from the North American Securities Administrators Association (NASAA) shows that its COVID-19 Enforcement Task Force has taken action to disrupt 250 schemes that have fraudulently sought to profit from the pandemic.

The fraudulent schemes include 168 investment-related schemes and 94 non-investment schemes, such as those pitching investments in medical technology and healthcare firms.

Typical schemes involve membership units in general or limited partnerships, penny stocks, and other investment vehicles such as private placement offerings, initial coin offerings and other crypto investments, and crowdfunding.

NASAA says that scams during a crisis are nothing new and typically focus on fear and anxiety by promoting ‘safe returns’ outside of the stock market and economy.

Cryptos and other digital investments are often used due to the relatively low knowledge among retail investors.

Passive income?
While not all of the ‘opportunities’ are illegal, they are generally highly speculative with claims of regular “passive income” attracting hopeful investors.

“Through the task force, state and provincial securities regulators successfully raised awareness of how fraudsters can use the pandemic to cloak schemes to steal money from unsuspecting investors,” said Lisa A. Hopkins, NASAA President. “Fraudsters should know that the work of the task force is not over and that state and provincial securities regulators will continue to take decisive action to shut down their schemes.”

Hopkins added that investors should thoroughly investigate claims in investment schemes and contact provincial or national regulators if scams are suspected.