Question of the week: What registrant misconduct?

According to the Canadian Securities Administrators (CSA) registrant misconduct is a violation of securities laws by a registered person or company. It can also include misconduct to fail to register or to fail to adhere to the conditions of a registration exemption.

Although registrant misconduct can include any violation of securities laws there are certain red flags that investors should be aware of and watch for to help them avoid this type of investment fraud.

Offering special or private deals to their clients:  A registered person should not recommend or sell any products or offer deals that are “secret,” “special,” or “private.” This is a major red flag and should not just be declined, but reported to securities regulators.

High-Pressure sales tactics:  An adviser should never pressure or bully you into an investment. If you are uncomfortable with how your adviser is recommending investments this is also a red flag. All investments recommendations from your adviser should be presented with all the risks, fees, and background information. An adviser should be able tell you why a certain investment is suitable to your financial goals.

Requests for direct payment: You should never write cheques payable to your adviser. Cheques for investment purposes should always be made out to the registered firm.

Statement errors: Always review your statements to make sure they are correct. This means that the investments you agreed to purchase and the amounts are accurate. You should also check for any unauthorized withdrawals or purchases from your account.

Are they registered: Always ensure the person you’re dealing with is registered with a securities regulator. You may also want to check the category of registration your adviser has to ensure they are registered to advise and sell the securities they are recommending to you.