ASIC’s list offers guidance on suspicious investment “opportunities”

The Australian Securities and Investments Commission (ASIC) has published an investor alert list which may help consumers to identify whether entities they are considering investing with could be fraudulent, unlicensed or running a scam. This new investor alert list replaces the previous list of “companies you should not deal with” issued by ASIC, and has the advantage of including both Australian and international entities that the regulators are concerned about. The alert list also includes imposter entities.

As a part of the government strategy to target investment scams, ASIC and the Australian Competition and Consumer Commission (ACCC) – through the newly formed National Anti-Scam Centre – have published an investor alert list which may help consumers to identify whether entities they are considering investing with could be fraudulent, running a scam or unlicensed. While the list is not exhaustive, as new scams are appearing every day, any reduction of consumer harm, financially and non-financially, is surely a positive step. 

According to the National Anti-Scam Centre, which commenced operation on 1 July 2023, Australians reported a record $3.1 billion of losses to scams the previous year, which was 80% more than the year before. While the Centre is still building its capabilities over the next three years by working on a new system to improve scam data sharing across government and the private sector, it is already making inroads by highlighting the most harmful scams and making it easier for Australians to report scammers. 

The new investor alert list replaces the previous list of “companies you should not deal with” issued by ASIC, but has the advantage of including both domestic and international entities that regulators are concerned about. These concerns largely relate to entities operating and offering services to Australians without appropriate licenses, exemptions, authorisation or permission. The alert list also includes imposter entities which run impersonation scams that falsely claim to be associated with legitimate and often well-known businesses. 

For consumers looking to invest, ASIC recommends conducting the following checks before handing over any money: 

• Check whether the company or person is licensed or authorised: generally, a company or finance professional must hold an Australian financial services (AFS) licence in order to issue or sell investments in Australia, or they must be an authorised representative of an AFS licence holder. Checks can be made through the ASIC website on professional registers, the financial advisers register, or Australian registered scheme number in relation to a managed investment scheme to ensure appropriate licences are valid. 
• Understand how the investment works: ASIC recommends obtaining a product disclosure statement (PDS) or prospectus from the public website for the company, speaking to a financial adviser and/or searching ASIC’s Offer Noticeboard. In addition, ASIC reminds consumers that investments including cryptocurrency, direct investment in real estate or precious metals, and international investments not offered by licensed Australian providers are not regulated by ASIC and are higher risk. Consumers are not protected if things go wrong. 
• Check for common signs of an investment scam: consumers should check the company’s details through open-source searches and consider calling the number on the public website. Be wary of any offer documents sent by email. Consult the investor alerts list. 

Even if you invest in a legitimate financial service or product from a licensed company/individual, there may be instances where things can go wrong.  However, those entities are obliged by law to take steps to resolve any complaints from consumers. For consumers that invest in unlicensed or unregulated products in Australia, there is very limited assistance should things go wrong.

Going forward, ASIC will continue to add to the investor alerts list and has urged both industry and consumers to assist in identifying suspicious websites or investments scams by reporting them to the appropriate authorities. 

Source: https://moneysmart.gov.au/check-and-report-scams/investor-alert-list 
https://asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-296mr-asic-releases-new-alert-list-highlighting-suspicious-investment-opportunities/