Two of Canada’s provincial securities regulators are warning the public to be skeptical of online advertisements targeting the newly unemployed and offering them work as stock and currency traders.
Over the past two weeks there has been a proliferation of advertisements on popular classified Internet sites, such as Kijiji, as well as social media sites like Facebook, directed at people interested in making more money from home. Some of these advertisements have captions such as “at home needing something to do?” The ads also highlight the recent spate of layoffs and unemployment figures, cajoling readers: “You need to be making money online!”
Both the British Columbia and Alberta Securities Commissions issued warnings this week about such advertisements, reminding the public that any company in the business of trading stocks or currencies on behalf of investors in their respective provinces must be registered. In separate news releases, both regulators said the companies that concern them most require would-be traders to pay fees before they are permitted to trade. “Neither the firms nor the fees are legitimate,” both regulators said in statements. Neither regulator identified the suspect firms by name in their news releases.
The Globe and Mail identified a number advertisements similar to the ones described by the regulators, but was unable to reach anyone for comment at the phone numbers linked to those companies.
In its release, the Alberta Securities Commission highlighted the riskiness involved in day trading, especially for an uninitiated trader. “The extreme volatility of current market conditions compounds the level of difficulty in achieving the high returns the ads claim.”
The public needs to heavily scrutinize any solicitation that suggests the ongoing health crisis can be profitable, said Hilary McMeekin, manager of communications for the Alberta Securities Commission. “As people become more emotionally and financially vulnerable, that’s the environment fraudsters prey upon,” Ms. McMeekin said.
The ads are the latest example of individuals attempting to exploit the COVID-19 pandemic and its economic fallout to lure people into scams, the regulators said. Just last week, the Canadian Securities Administrators, the umbrella organization for the provincial regulators, issued a warning to investors about publicly traded companies claiming to have a potential cure for, or propriety technology for detecting, the virus.
In particular, the regulators warned investors to be on the lookout for “pump and dump” schemes. Such schemes typically start with a thinly traded, penny-stock company making false claims about a potentially lucrative innovation to help with the pandemic. The false information is spread through social media, drawing in investors and inflating – or “pumping” – the price of the stock. Once the stock price rises, fraudsters sell their shares – the “dump” portion of the scheme – leaving new investors with worthless paper.
“At this time, there is no vaccine or any natural health product that is authorized to treat or protect against COVID-19,” the CSA’s release stated.
Since February, the United States Securities and Exchange Commission has had to temporarily halt trading in two companies because of alleged problems with the accuracy of statements made about their purported treatments for the coronavirus. One of those companies, Eastgate Biotech Corp., is traded on the Over-The-Counter Market and lists its head office in Toronto. Trading in Eastgate was halted between Feb. 24 and March 6. In a statement, the SEC said it had concerns about, among other things, “the company’s purported international marketing rights to an approved coronavirus treatment."
In an e-mail to The Globe, the president of Eastgate, Rose C. Perri, said that her company’s main drug in development is a liquid insulin mouth rinse for Type 2 diabetes patients. Ms. Perri also said that Eastgate works with “partners” who may “bring other opportunities to the table, including any COVID-19 products.”