It is staggering how so many people get caught by overseas investment cons which begin simply with an unsolicited phone call or email. The dollars lost in this way are breathtaking. Australians have lost at least $400 million in this way, estimates the Australian Securities and Investments Commission (ASIC). In essence, these scams appeal to a fundamental instinct in countless would-be investors: How can I make money quick? It would have been this same sort of instinct that motivated numerous investors to over-gear their shares with margin loans as markets neared a peak before the last bear market – only to be forced to sell to meet margin calls after prices had plummeted. ASIC has a valuable new addition to its consumer website – headed ‘Received an investment offer out of the blue?’ – which is well worth a read, even by those who consider themselves impenetrable to investment scams. See http://www.fido.gov.au/fido/fido.nsf/byheadline/more what''s new?opendocument Why do these unsolicited phone calls (emails, faxes, etc) promoting alleged investment schemes typically come from overseas? The answer is straightforward. The promoters have an international target market and local agencies such as ASIC do not have the power to prosecute them. It is illegal under Australian law to make phone calls promoting investment products without an Australian financial services licence. Interestingly, ASIC keeps a list of overseas businesses that have made unsolicited investment calls to Australians yet do not hold an Australian financial services licence. (http://www.fido.gov.au/FIDO/fido.nsf/byHeadline/Cold-calling?opendocument##2) The length of the list shows the depth of this scam being directed at Australians. There would, however, be many calls made by unlicensed operators that are not reported to the regulator. ASIC also provides a means to search whether a business promoting an investment scheme has an Australian licence (http://www.search.asic.gov.au/fsr/flb.html). Given the severe volatility in the markets over the past month, some unsettled investors may become more vulnerable than usual to questionable investment offers. Be warned.
22nd-June-2010 | 
