The next CEO of the Autorité des Marchés Financiers (AMF), who will succeed Louis Morisset in July, faces a major challenge to better protect Quebec investors from the foreign threats that are multiplying in the digital world.
While Mr. Morisset firmly believes that under his leadership, the AMF has tightened the regulatory and legal framework for Quebec-based companies to increase the level of investor protection, they are nonetheless increasingly vulnerable to cross-border scams. The scams of the 2020s are unlikely to resemble the Norbourg scandal, an asset management firm that embezzled investors’ money for the benefit of its president, Vincent Lacroix.
“The type of fraud we see today is often perpetrated by actors located elsewhere in the world, Louis Morisset observes. People have to be very careful. »
While the AMF tries to make investors aware of the risks, its actions alone will not be enough. Mr. Morisset, who is completing his second five-year term as head of the AMF, therefore urges the Quebec financial industry to do even more.
“It’s colossal work. We put a lot of energy into it and I invite all stakeholders in the financial sector to work with us to raise awareness. »
explosion of complaints
In the specific cryptocurrency niche, the number of complaints has increased from 41 in 2020 to 474 in 2022. Since the beginning of 2023, the AMF has received 15 to 20 complaint calls per week. Almost every second person who contacts the authority has already invested and is probably the victim of a fraud committed from abroad.
“We are not thinking of banning cryptoassets but are working hard to raise public awareness. It’s certainly not for everyone and the risk of losing your money is very high,” Mr Morisset said in an interview with the Journal.
There are various schemes at work on the web. Often a window will suddenly appear on the screen, a virtual conversation will be held, then the person will be encouraged to invest and reinvest until he realizes that the promised returns were just mirages.
“There are people involved in fraud who are reluctant to say this, but we encourage them to come to us to report the case. This allows us to intervene and have illegal sites blocked or issue warnings to protect others,” emphasizes Louis Morisset.
The AMF maintains an alerts list on its website, which currently identifies 436 high-risk platforms.
The AMF’s supervisory powers are limited to Québec residents and financial sector companies. The AMF also invites investors and buyers of insurance products to do business with Québec companies.
The AMF claims its action has sanctioned 414 individuals or companies over the past five years, resulting in $83 million in fines and jail time.
When it was formed in 2004, the AMF had 47 investigators and prosecutors. It is today a team of 200 people working to catch criminals in the financial sector.
Autonomous investors, prey of choice
Do-it-yourself investors have skyrocketed during the pandemic and are prime targets for web scammers.
“With the pandemic, we were all stuck at home and a lot of people started doing that [faire des transactions] online, be it for consumer goods or financial products,” says the CEO of the Autorité des Marchés Financiers.
In a speech last November, Louis Morisset pointed out that in Canada the number of direct investment accounts rose from 7.7 million in early 2020 to 10.6 million a year later. During this period, the number of transactions more than doubled from 30 million to 81 million.
“It’s interesting, but it takes knowledge and skills to invest and not everyone has them,” notes the manager, who wanted to increase AMF’s awareness-raising actions, particularly on social networks.
If you know little about the markets and how the financial industry works, you are more susceptible to scams and other types of traps. Louis Morisset is concerned about the influence of various influencers on social media such as TikTok and Instagram, as well as the misinformation that is often spread across the internet.
Pay attention to the game
Fun is one of the top motivations of do-it-yourself investors, according to a SOM survey prepared for AMF. Companies in the financial sector understand this, and even among those that are legitimate and registered with the AMF, some have practices that confuse investing and video gaming. In the face of this phenomenon, which attracts many young people, we must be particularly vigilant.
“There are legitimate apps that make investing fun, and when you hit certain milestones, they send you confetti and even small amounts of money to invest. It’s supposed to be influential, but it can lead to uninformed decisions,” worries Mr Morisset.
Since 2016, the AMF has had a whistleblower program that guarantees confidentiality and the absence of reprisals against whistleblowers. In the United States and Ontario, they can receive rewards, but Louis Morisset is not convinced of the relevance of such a measure.
In 2021-2022, 131 public denunciations launched five investigations and added 14 other relevant information.
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