A recent Canadian Securities Administrators (CSA) Investor Alert (Alert) points to the emergence of firms, known as claims management companies (CMCs) that offer paid services to investors to interreact with the Ontario Securities Commission and other member of the CSA, the Canadian Investment Regulatory Organization (CIRO), and the Ombudsman for Banking Services and Investments (OBSI) related to claims or complaints free of charge.

The Investor Alert emphasizes that it is not necessary for investors to pay a fee to a CMC, to interact with a regulator or oversight organization in a claim or complaint process, as the Ontario Securities Commission, CSA, CIRO and OBSI offers these services to investors free of charge.

Some CMCs claim to be able to recover funds lost in cryptocurrency or other investments, through filing a claim or complaint with a regulator or oversight organization when in many cases this is not possible.

The Investor Alert cautions that the unregulated CMCs in some cases:

  • provide services that are not necessary or are of value;
  • overcharge for services that otherwise can be had at no cost; 
  • make overly optimistic predictions of recovery, particularly regarding cryptocurrency frauds;
  • inaccurately describes the role of a regulator or oversight organization by indicating the primary purpose of the regulator or oversight organization is the recovery of lost funds, when it is not;
  • prepares basic documentation for the CSA, OBSI or CIRO on behalf of an investor that does not provide sufficient information to investigate or understand the alleged fraud; and
  • asks an investor to hide the CMC’s involvement in a claim or complaint from the regulator they are interacting with.

The Investor Alert can be found on the website of the Canadian Securities Administrators.

For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.

This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.