Quebec market regulator says COVID-19 scams are increasing

Economic fears spawn frauds, says Autorité des marchés financiers

The watchdog agency that regulates financial and investment services in Quebec has issued a warning about unfounded forward-looking statements based on COVID-19 speculation involving a British Columbia-based gold mining company.

‘Exaggerated claims’

In a statement issued on April 21, the Autorité des marchés financiers (AMF) said it is urging the public to exercise great caution with regard to the promotion of the activities of Crestview Exploration Inc.

As is often the case with other gold producers, Crestview’s fortunes are viewed as being on the short-term upswing, as buyers flee mainstream stocks and take shelter in gold investments.

According to the AMF, a mailing sent from a “stock analyst and geologist” to residents of B.C., Alberta, Manitoba and Saskatchewan “makes exaggerated claims about Crestview Exploration, predicting that its stock price will soar as the recession hits,” says the AMF.

Not responsible, says firm

The letter comes in an envelope, without a return address, that says in bold red letters, “CORONAVIRUS AFFECTING MARKETS: READ NOW.”

“The short-term upside potential for investors buying shares of Crestview Exploration today is around 500% while long-term shareholders (12+ months) could see gains exceeding 2,400%,” the letter states.

The AMF points out that Crestview Exploration, which is listed on the Canadian Securities Exchange and the Frankfurt Stock Exchange, issued a statement on April 8 stating that it was not responsible for the promotion, while further saying that the letter contained “unfounded forward-looking statements.”

‘Baseless projections’

Crestview Exploration strongly urged investors and potential investors to verify any statements, and the source of such statements, contained in buy recommendations they may have received.

The AMF has become aware of scams that allude to potential gains from investments in schemes involving COVID-19

While saying that no cases had been brought to its attention to date, the AMF reminded investors to exercise caution if they received the letter “containing false promises of large profits and baseless projections,” said the AMF.

According to AMF spokesperson Sylvain Théberge, the agency has become aware lately of other investment scams that allude to potential gains from investments in schemes involving COVID-19.

Rise in COVID-19 fraud

The AMF says you should be wary if you’re invited to invest in companies claiming to offer products or services to prevent, detect or treat coronavirus infections (COVID-19), and that fraudsters are taking advantage of current events to lure potential investors with promises of very high returns.

The scams can take different forms, according to the AMF. For example, they may spread false rumors on social media in hopes of causing the values of shares they hold to artificially increase, then sell them to others at a profit. Buyers may realize later that they paid inflated prices for shares that are actually almost worthless.

No such thing as ‘no risk’

Fraudsters might also push potential investors to make snap investments in order to take advantage of “once-in-a-lifetime” opportunities. But the AMF reminds investors that there is actually no such thing as a high-yield, no-risk investment.

The agency also warns that fraudsters are known to play on fears caused by current economic conditions to approach potential victims. As such, you may receive unsolicited e-mails or text messages warning about your investments or personal finances. The e-mails or text messages may direct you to click on a link or open an attachment.

Know who you can trust

But, as the AMF notes, the fraudsters’ goal is often to steal your personal information or install malware on your computer or cell phone. If you’re concerned about your investments or current financial situation, they suggest you contact the broker or investment firm you usually deal with.

Have you received what appears to be a legitimate e-mail or text message from a financial institution you do business with? The AMF recommends you don’t take any chances. Instead of clicking on a link or opening an attachment, go straight to the financial institution’s website. If in doubt, give the institution a call to be certain.

Employment fraud

And the AMF says it is hearing more and more lately about fraud involving promises of employment to people impacted by the massive job losses brought about by the COVID-19 crisis. The agency says fraudsters are soliciting job seekers on sites like LinkedIn, Facebook, Kijiji and Craigslist.While they may seem on the surface to be realistic and come from both known and unknown companies, the truth is that employment offers are often used by fraudsters to steal personal information, while tricking you into wiring them money in cryptocurrency, after which they are nowhere to be found.

Martin C. Barry, Local Journalism Initiative Reporter for the Laval News,