Avoiding Internet investment scams

This is an excellent public-service piece of information from the Securities Commission Malaysia (SC).

If you are an investor, you should be aware of these warning signs before you agree to invest any money with anyone or any company through the Internet. It may be an investment scam so it’s better to be careful before you are burned.

1. Websites offering investment schemes that claim to give high return with low financial risk;
2. Companies or persons who claim to be investment experts. They will highlight their ‘excellent track record’ and also give testimonials from their clients but always, the information is usually not open for verification;
3. Unable to produce a licence for their activities, with some even claiming that their activities do not require a licence, or their licence is issued by another country;
4. Investment recommendations and advice/tips are delivered to clients by email, SMS, access to password-protected webpages or one-to-one or group meetings;
5. Companies or persons who advertise their services through indiscriminate use of email messages and messages posted on various Internet discussion sites;
6. Professionally-looking websites that resemble legitimate businesses and may be equipped with real time stock prices, market commentary, market news and links to other financial websites. Some use posh-looking office addresses which are often dubious;
7. Free services on websites that include a basic tutorial about the capital market, ebooks and access to chatroom/bulletin boards.

The SC advised that this list is not exhaustive and new ways are always being invented every day by unscrupulous persons to lure unsuspecting victims. In addition to the above, you should also be wary of investment programmes that:

• Offer secret and private investment markets for their privileged investors;
• Entice you with a golden investment opportunity that’s only available during a very short offer window; or
• Ask for payments to be made to a foreign bank account.

As an investor, you should carry out due diligence and background checks before you make any decision. For example:

1. Check for a licence. Verify with the SC that the person or company has a licence to give investment advice.
2. Get all the facts. Never make an investment decision based on emotion or solely on unsolicited advice posted on the Internet.
3. Do an independent evaluation. Check and double-check your information. Conduct your own evaluation on the investment opportunity. Refer to a licensed investment adviser or remisier, if required.
4. Just ignore them. If you can’t trust the information, the best decision is to ignore it totally.

Finally, if you come across any suspicious website, email or any information on the Internet relating to investment advice and services, you may alert the Securities Commission by email to aduan@seccom.com.my.

The Securities Commission’s website makes interesting reading. To spot bogus investment schemes, read the educational articles from the Malaysian Investor website.