#ASKASC – Q&A PAGE

Wondering how to check your adviser’s registration? Curious about RRSP contribution limits? You have the questions, CheckFirst has the answers! From October 3 to October 31 we’re answering all of your questions related to investing.

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Q&A – latest questions

1. For someone who hasn't ever invested, how do you recommend getting started?

If you’re new to investing, there are a number of things you’ll need to consider before getting started, including setting goals, developing a plan and knowing your risk tolerance. Knowledge is power, so increasing your investing knowledge before starting is also a great idea. If you need guidance to get started, you may want to seek the services of a financial adviser. More information to help you get started can be found here.  

2. What are the steps I should take to make sure I am investing with a good firm and or advisor?

Before choosing a firm or adviser, a great first step to help you make an informed decision is to check registration. With limited exceptions, in order for a firm or individual to sell securities or offer investment advice in Alberta, they must be registered with the ASC.  You can check the National Registration Database to see for yourself if they are registered.  Registration helps to protect investors because securities regulators will only register firms and individuals that meet certain proficiency, integrity and solvency requirements. Click here for more steps to help you make an informed decision.

3. Why are people afraid of independent agents compared to banks?

When looking for help with your finances, there are a wide range of financial professionals to choose from who may work independently or for a bank. No matter who they work for, it’s important to always do your homework before handing over your money. Doing your homework involves three simple steps: check, protect, then invest. Click here to learn more.

4. What does the ASC do when it receives a complaint?

The ASC reviews complaints made against individuals or companies involved in trading securities in Alberta. If the actions of these individuals or companies suggest possible breaches of Alberta securities laws, further investigation may be warranted. Documents will be reviewed, investors and others may be interviewed, and evidence will be gathered and analyzed to determine whether one or more breaches have occurred. A formal hearing may then be initiated, where a tribunal will rule whether breaches took place and, if so, whether to impose administrative sanctions to protect the public and enforce compliance with regulatory requirements. The ASC can also prosecute individuals or companies in the Provincial Court of Alberta.

5. How do I find out if there have been complaints or investigations about an individual or company?

As with other regulatory or enforcement agencies, the Alberta Securities Commission must release information to the fullest extent possible, while ensuring the process of investigations and conduct of the proceedings are not prejudiced.

Under the Securities Act, the Commission cannot comment publicly as to the existence, status, or nature of an investigation being conducted. This is intended to protect the integrity of the investigation, ensure the complaint process is not used to affect the market and be just to those who are the subject of investigations.

If enforcement action has been taken against an individual or a company, this information is a matter of public record and available from the Enforcement Orders database or Scheduled Proceedings.

6. Can I make an anonymous complaint?

We must be able to contact complainants for more information, so we strongly urge complainants to provide contact information. Further, the identity of complainants is kept confidential to the extent permitted by law. While we do not prohibit anonymous complaints, it is rare that we can take effective follow-up action on complaints that are submitted anonymously.

7. How long do I have to make a complaint to the ASC?

The ASC can only take proceedings respecting breaches that occurred within the preceding six years.

Q&A – Advisers

1. What do I do if I just signed up for an investment with a company or adviser that I no longer feel comfortable with?

Talk to the company directly to see if they are flexible and will consider your request.

If not and you have already signed up in the last 24 hours, call the ASC and you might be able to get out of the investment under something called the rights of recision where you have a 48-hour period to get a full refund. See section 209 and 210 in the Securities Act (Alberta).

If 48 hours have passed since you signed, you will need to talk to a lawyer to determine what actions you might be able to take.

2. I have a complaint against my investment dealer, adviser or mutual fund salesperson. What do I do?

If your complaint is of a minor nature and does not reflect on the integrity of your adviser or salesperson, talk to them. If this does not resolve the matter, or if your complaint is of a serious nature, send a written complaint to the firm that employs the individual you are dealing with. Request a meeting with the branch manager or compliance officer of the firm to discuss your concerns. If the matter still remains unresolved, file a written complaint with one of the governing regulatory organizations:

  • If the investment adviser is employed by a member firm by the Investment Industry Regulatory Organization of Canada (IIROC) you should file your complaint directly with them at www.iiroc.ca
  • If the salesperson is employed by a member firm of the Mutual Fund Dealers Association (MFDA), you should file your complaint directly with them at www.mfda.ca.
  • If your dealer/adviser or salesperson is employed by a firm that is NOT an IIROC or MFDA member, or you are unsure who to contact,  file the complaint with the ASC.

3. What should I do if my financial adviser did not place my order when I told him to do so?

If you have concerns over the length of time it took your financial adviser to place your order, you should contact them to find out why.  If it was a short delay, your financial adviser may have a reasonable explanation for you. If your order was not placed for an extended period, contact the branch manager or compliance officer of the firm. If the matter still remains unresolved, contact IIROC or the MFDA.

4. How can I find out if an adviser is registered?

With limited exemptions, an individual or company who is selling securities or offering investment advice in Alberta must be registered with the MFDA, IIROC or ASC.

You can check registration for free on the ASC website or contact the ASC at 1-877-355-4488 or inquiries@asc.ca to find out if an individual or company is registered.

5. How does registration help protect investors?

Securities regulators will only register firms and individuals that meet certain proficiency, integrity and solvency requirements.

Q&A – Companies

1. What is a Cease Trade Order?

A Cease Trade Order (CTO) means a company cannot sell any of its shares. While a CTO is in effect, the company cannot promote its shares or perform any sales functions in anticipation of the CTO being revoked. If you believe a company might be subject to a CTO, you can search the National Cease Trade Orders Database.

2. What should I do if I have not received my share certificates from the publicly traded company I invested in?

If your shares are registered in “street” form, the transfer agent holds these securities in trust for you. If your shares are registered in “bearer” form, your name should be on the certificates. If you would like to receive the actual share certificates, contact the company’s investor relations department or transfer agent.

3. What should I do if I have not received any shareholder or proxy-related materials from the company in which I hold shares?

You should contact your investment adviser to determine whether you have completed the required forms to have your name placed on the company’s mailing list. If you have, you should contact the investor relations department of the company.

4. What rights do I have as a shareholder?

Shareholder rights are set out in the corporate law under which a company is incorporated. For a company incorporated in Alberta, the Alberta Business Corporations Act is the applicable law. For a company incorporated federally, the Canada Business Corporations Act is the applicable law.

5. Where can I find information about a company?

You can find out information about a company from its disclosure documents, which include financial statements, prospectuses, news releases, material change reports, information circulars, and other documents.

Public companies are required to file their financial statements and other disclosure documents on the System for Electronic Disclosure Analysis and Retrieval (SEDAR). You can also search online for any news stories or complaints about the person or company.

6. How can I find out if a company is in compliance with securities laws and disclosure requirements before investing?

The ASC maintains a Reporting Issuer list that identifies:

  • Reporting issuers in Alberta (which are usually issuers whose securities are traded on an exchange recognized by the ASC).
  • Alberta reporting issuers that have been noted in default of certain requirements of Alberta securities laws.
  • Alberta reporting issuers whose securities are the subject of a cease trade order by the ASC.

7. I believe I’ve been approached with a potential investment scam, what should I do?

If you suspect investment fraud has happened to you, is happening in your community or to someone you know, it is important to report it by contacting the ASC.  We need to know what is going on in your communities in order to work to stop it. A tip from you can help our enforcement team and help others avoid becoming victims. Learn more here.

General investing Q&A

1. What is a Ponzi scheme?

A Ponzi scheme is a type of investment scam that promises high rates of return with little or no risk to investors. Returns on investment are not paid from profit, but from money invested by new investors – there is no legitimate investment. More information on Ponzi schemes can be found here.

2. What is the average rate of return that I should expect on an investment?

Most people aim for a rate of return that is greater than inflation – otherwise you experience “inflation risk” where the value of your income decreases as inflation shrinks the purchasing power of a currency. As the level of return for an investment is related to the level of risk for that investment, you will need to determine what level of risk you are willing to take for the return you want. Your tolerance for risk may depend on:

  • what is more important to you—keeping your money safe or seeking higher growth?
  • when you need your money?
  • how you react to the ups and down of the markets.
  • if you have any debts.
  • if you have any other sources of income to fall back on.

3. Can the ASC give me advice on what stocks to pick?

The ASC isn’t able to provide advice on choosing investments. This website, Checkfirst.ca, has information to help you learn ways to make an informed investing decision.

4. What is an RRSP?

A registered retirement savings plan (RRSP) is a type of account that you can save in, ideally for your retirement. You can hold a wide range of investments in an RRSP, including cash, mutual funds and stocks. Contributing to an RRSP also has tax-saving advantages and it is a tax-sheltered account. Click here for more information on RRSPs.

5. What are some common investing mistakes people make?

Even the most experienced investors can make common investing mistakes. Below are three common mistakes people make when it comes to investing.

    1. Investing before researchingIt’s important to always research the investment before you hand over your money to help you make an informed decision.
    2. Ignoring risk Almost all investments involve some level of risk, but many investors simply focus on their returns (reward). Before you invest, it’s important to be aware of the risks that can affect the performance of your investments and be aware of how much risk you are comfortable taking.
    3. Having too many or too few investments –  Diversify your investments. Having too many can destroy the chance for good returns, while having too few increases risk.

Click here for more common mistakes and tips to help you invest wisely.

6. What are binary options?

Binary options are an “all or nothing” wager on how an underlying asset will perform in a limited amount of time. Investors can have as little as 60 seconds to predict the market’s minute-by-minute fluctuations, which make investing in binary options extremely risky, even for seasoned investors. More information on binary options can be found here.

7. What is the difference between saving and investing?

Saving is meant to simply preserve money or set it aside to protect it for when it may be needed.  Investing is always done expecting a profit or some sort of appreciation of the amount that is put in.

8. Why is diversification important?

Having a different kinds  of investments in your portfolio can help create steadier returns in the long run and help minimize risk. If you are heavily invested in one sector and it loses value, it can have a big impact on your investments and financial future. There are many ways to diversify your investments, including:

  • Type of investment
  • Type of industry
  • Time to maturity