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Ontario Securities Commission Investor Alert - December 2004
Is it Independent Research or Paid Promotion?
Toronto –The Ontario Securities Commission (OSC) is encouraging the public to consider the difference between marketing publications and investment advice. Unsolicited investment newsletters are commonly sent out by fax and e-mail by firms that are paid to promote investments. Before you act on the material, consider that it may not give you a balanced picture.
Promotional Language:
- Headings such as "Hot tip" and "Special Alert" will attract your attention to information that seems authoritative and professional, but may not provide the whole story.
- Statements like "the potential to make our readers wealthier than they ever imagined"- potential is not a guarantee.
- Claims that other smart investors are already following this advice - in the hopes that you will follow the crowd.
What you should watch out for:
- Fine print that contradicts what's promised in the newsletter. Look for statements like "The reader assumes all risk as to the accuracy and the use of this document."
- Free stock research that you didn't ask for. Chances are that someone who doesn't know anything about you or your investment objectives doesn't have your best interests in mind.
- Promotions for companies that are not listed on a stock exchange. These companies may be subject to less regulation and have fewer disclosure requirements - which means higher risk.
- References to current events like commodity shortages and global terrorism to create a sense of urgency. These are high-pressure sales tactics.
The following tips will help you protect your money:
- Recognize that unsolicited investment newsletters do not take the place of advice from a registered industry professional.
- Past profits do not guarantee future results.
- Any person or company selling securities or offering investment advice in Ontario must be registered with the Ontario Securities Commission. Call the OSC at 1-877-785-1555 to confirm the registration of any such individual or company.
Base your investment decisions on the research you've gathered from credible, knowledgeable and diverse sources. Contact the Ontario Securities Commission toll free at 1-877-785-1555 for further information. You can learn more about investment topics on-line at www.InvestorED.ca.
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