Consumer Tips

Securities - Investor Self - Protection

SUMMARY: The purpose of this report is to remind you of some important steps you can take to safeguard your financial well-being.

1. INVESTIGATE BEFORE YOU INVEST

Investing in securities is never risk-free. Some investments carry more risk than others. Before making any investment decisions, be sure to understand the investment and its risks. Talk to registered professional advisers. Take time to read about the company, its management and its business. A great deal of information is available for most types of investments from a variety of sources including investment dealers, the company itself, the local library, the internet, as well as public files at securities commissions or stock exchanges.

Securities legislation does not guarantee the value of any security or insure against loss. The legislation is designed primarily to ensure that you have access to the information you need to make sound decisions.

Determine your investment objectives before you begin to build your portfolio.

2. CHOOSE YOUR DEALERS AND ADVISERS CAREFULLY

They will be relied upon for important advice and entrusted with your money. The utmost integrity and honesty, as well as knowledge, experience and good service should be expected. Remember, all dealers and advisers are not alike. All must have certain qualifications to be registered, but as with any other profession, some will provide better service, some will be more skilled, some more financially stable and some more reputable.

Select dealers or advisers as you might a family doctor. Ask questions to ensure they have the expertise expected and make certain that they clearly understand your investment needs and objectives, and your tolerance for risk.

Find out whether your account is covered by any plan to secure against loss in the event of insolvency of the dealer. There are two contingency plans used by dealers in BC, the Canadian Investor Protection Fund and the BC Contingency Trust Plan. The levels of coverage offered by these plans are very different. Securities rules require that dealers provide, on request, information about these contingency programs.

The British Columbia Securities Commission will also be able to tell you if the dealer you want to rely on has been subject to any disciplinary action in the past.

3. DON'T BE A VICTIM OF HIGH PRESSURE SALES TACTICS

If someone tries to pressure you into an investment decision, walk out of the room or hang up the phone. No reputable dealer would engage in high-pressure sales tactics. It is illegal in BC for anyone to call or telephone you at your home to sell securities, unless the caller is a registered dealer with whom you have an established investing relationship.

4. GET WRITTEN INFORMATION ABOUT THE INVESTMENT BEFORE YOU DECIDE

If you are told there is no written information, find another investment opportunity. Be skeptical. If it sounds too good to be true...it probably is. There is no 'free lunch' when it comes to investing. Higher potential profits invariably mean higher risks.

5. PERSONAL RECOMMENDATIONS

The person recommending an investment may have a personal interest in the sale or a limited selection of products. The product may not be suitable for you. Get advice from a qualified, independent professional.

More often than not, rumors and hot tips are incorrect. Ask why the product is being promoted as a 'hot tip'. Will it stand up to hard rational scrutiny? Take the time to get the facts first before putting hard earned money at risk.

6. KEEP RECORDS

Most securities transactions are arranged over the phone. Notes of conversations, instructions and transactions records will be invaluable to you if a problem arises with your account.

7. IF A PROBLEM ARISES, ACT QUICKLY

If a problem arises with your investment account, advise the dealer immediately, ideally in writing. It could be a simple administrative error. If the problem cannot be resolved quickly, contact management, and if you are not satisfied, contact the appropriate regulatory agency.

8. DON'T RELY TOO MUCH ON PAST PERFORMANCE

Remember, making investment decisions involves trying to predict the future performance of the company. There can be no guarantee that future performance will match past performance.

9. REMEMBER THERE IS RISK. KNOW YOURSELF, YOUR OBJECTIVES, AND YOUR TOLERANCE FOR RISK

There is no such thing as a 'sure thing'. Stocks, bonds, mutual fund units - in fact are all securities - can go up and down in value. Some are much more volatile than others. Determine how much risk you are emotionally and financially prepared to take.

10. INVESTING IN A PRIVATE COMPANY

Private companies are generally prohibited from selling securities to the public unless the sales are to employees, relatives or so called 'sophisticated investors', that is investors able to purchase units of $25,000 or more. Securities of private companies are also subject to restrictions on resale. Be sure that you know what the private company is able to sell to you, that you have the information you need and that you fully understand the risks and the resale restrictions.

Private company investments are generally not liquid. You may not be able to obtain your funds when you need them.