Sometimes, the information we receive from complaints, audits and compliance activities, or from other sources, leads to investigations. These investigations may indicate that people or entities have violated the requirements set out in New Brunswick’s financial and consumer services legislation. If these people or entities reside within New Brunswick, we use our legislated authority to hold them accountable through our hearing processes or by collaborating with law enforcement. If they are outside New Brunswick, we work with other regulators and law enforcement to make appropriate referrals where possible.
We may also try to limit the scope of activity a registered person can engage in by imposing limitations or terms and conditions on a licence. In other cases, we have the authority to freeze accounts or order that certain behaviour stop. We also issue public alerts from time to time when we have evidence that someone has violated regulatory provisions in other jurisdictions or we have clear evidence of fraud.
You can sign up for alerts here.
If you have a complaint under New Brunswick’s financial and consumer protection laws, call us at 1 866 933-2222 or file your complaint online here.
You can review our Caution List to see if we’ve issued an alert on a particular individual or firm.
You can find material relating to FCNB’s Regulator Decisions here.
- What does cease traded mean?
- How do I get on the Do-Not-Call list?
- How can I tell if my dealer or adviser has been in trouble before?
- What is an accredited investor?
- What is a Pyramid Scheme? What is a Ponzi Scheme? What's the difference?
What does cease traded mean?
Cease traded means that a person or company has been ordered not to trade in securities. Trading includes all acts “in furtherance” of trading, like soliciting and promoting of the security. If you are concerned about a particular order, you should review it carefully. A cease-trade order may have particular terms or conditions with respect to activities prohibited by the order.
In order to sell or advise in securities in the province of New Brunswick an individual or firm must be registered with the Financial and Consumer Services Commission, unless an exemption applies. Securities industry professionals are required to register with the securities regulatory authority in each province or territory where they do business.
A person’s registration is more important than their title because it tells you the type of products or services they are qualified to sell or provide advice on. Registration helps protect investors because we will only register firms and individuals if they are properly qualified and meet a certain standard.
To verify if a firm or individual is registered, you can search one of these online databases:
or you can contact the FCNB directly.
If the name of the person you are searching for is not on this list, they may be relying on an exemption from the registration requirements or you may want to check the Caution List, which is a list of individuals or firms who are not registered to trade securities or provide investment advice in New Brunswick.
How do I get on the Do-Not-Call list?
The FCNB does not maintain the National Do-Not-Call list. You can review the requirements to be on this list with the CRTC: http://www.crtc.gc.ca.
What is an accredited investor?
The law enables an issuer to use a prospectus exemption if it issues securities to accredited investors. As an individual, to qualify as an accredited investor, you must have above-average income or substantial assets. National Instrument 45-106 describes in full detail the exemption criteria for accredited investors. If you are uncertain if you qualify as an accredited investor, please call the Financial and Consumer Services Commission. If you are not an accredited investor or a director, officer or employee of the issuer or any of its affiliates, the issuer may not be legally entitled to sell you its securities without a prospectus.
The law assumes that accredited investors can:
- access the information needed to assess an investment without help of a prospectus; and
- sustain the loss of their entire investment.
What is a Pyramid Scheme? What is a Ponzi Scheme? What's the Difference?
What is a Pyramid Scheme?
Pyramid schemes are frauds that promise very high returns based on the number of new "recruits" into the scheme. The returns that are paid out are financed by the funds paid in by new investors. Investors pay into the scheme and they then recoup their money (and, it is claimed, make a profit) from investments made by people they themselves bring into the scheme.
A pyramid scheme is based on a hierarchical set up. The new recruits make up the base of the pyramid. They provide the “returns” given to earlier recruits above them. A pyramid scheme is doomed to collapse based on its need for exponential growth in order for any new recruits to make money.
The key identifiers of a pyramid scheme include the following:
- Sales Pitch: A highly excited sales pitch.
- Written legal opinions: A reassurance that it is not a pyramid scheme, and assurances that it is perfectly legal to participate.
- Vague Information: Little to no information offered about the product or company unless an investor purchases the products and becomes a participant. Vaguely phrased promises of limitless income potential.
- Unrealistic pricing: No product, or a product being sold at a price in excess of its real market value.
- Passivity: An income stream that chiefly depends on the commissions earned by enrolling new members or the purchase by members of products for their own use rather than sales to customers who are not participants in the scheme.
- Early returns only: A tendency for only the early investors/joiners to make any real income.
- Multi-level marketing is not illegal. Legitimate income can be earned from the sale of products to people NOT enrolled in the program. It becomes a pyramid scheme when income comes primarily from the participants themselves. (E.g., Mary Kay, Avon, Tupperware)
What is a Ponzi Scheme?
A Ponzi scheme usually offers abnormally high short-term returns in order to entice new investors. The high returns that a Ponzi scheme advertises (and pays) require an ever-increasing flow of money from investors in order to keep the scheme going.
The system is doomed to collapse because there are little or no underlying earnings from the money received by the promoter. However, the scheme is often interrupted by legal authorities before it collapses, because a Ponzi scheme is suspected and/or because the promoter is selling unregistered securities. As more investors become involved, the likelihood of the scheme coming to the attention of authorities increases.
What is the difference?
|Schemer is a ‘hub’ and interacts with each victim||Those who recruit additional participants benefit (no recruits means no investment return!)|
|Relies on esoteric investment approach (insider info)||Claim that new money will be the source of payout for the initial investments|
|Can survive with a lower number of new investors (by getting previous investors to “re-invest” their money)||Exponential number of new participants needed cause these to collapse more quickly|