Warning! Unregistered online trading schemes.

 In Investments

The Alberta Securities Commission is warning investors to beware of unregistered companies offering online trading services.

The commission says it has received complaints from people — mainly in the Edmonton area — who have lost a total of more than $400,000.

Mark Dickey says the investments involved are called binary options, where people essentially bet on whether the value of an asset will increase or decrease in a short period of time.

He says the commission has identified seven companies, some of which are phoning would-be investors directly.

The commission says these types of unregistered companies list Canadian contact information, but are based in Ukraine, Cyprus and Belize.

Dickey says it can be nearly impossible for investors to recover their money if they’ve been bilked by offshore companies.

“We are really trying to get that warning out for people to make sure the company is registered,” Dickey said Friday. “The other point is that we also consider binary options to be risky.”

Dickey said the securities commission has received 15 complaints in the last month, but he expects that more people have lost money.

Earlier this month, the Quebec financial regulator issued a similar warning about binary options. The Autorite des marches financiers urged Quebec consumers to be cautious following a rise in the number of suspicious investment schemes offered by unregistered foreign companies.

Investigators in Quebec have identified more than seven companies, some based in Cyprus, the Virgin Islands and the United Kingdom.

Individuals and companies dealing in securities and derivatives in Canada are required to register with the securities regulator in each province or territory where they do business. Even though an entity may be located elsewhere, dealing to clients who are residents in Alberta for a business purpose requires registration unless an exemption from the requirement applies. Registration helps to protect investors because securities regulators will only register firms and individuals that meet certain proficiency, integrity and solvency requirements.

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