Red flags

Under most national securities laws, a company may not offer or sell securities unless the offering has been registered with the national financial authorities or an exemption to registration is applicable.  If the offering is not registered, it is often called a private placement or unregistered offering. Generally speaking, unregistered offerings are not subject to some of the laws and regulations that are designed to protect investors, such as disclosure requirements that apply to registered (public) offerings. Many companies engage in legitimate unregistered offerings to raise funds from investors. Fraudsters, however, may also use unregistered offerings to conduct investment scams. If a potential investor is presented with an opportunity to invest in an unregistered offering, in addition to thoroughly researching an investment—and the investment professional selling it—potential investors should and will be on the lookout for some common signs of potential fraud when they are thinking about investing in an unregistered offering.

IBC Rosemberg Finance will therefore not be involved when entrepreneurs have the following characteristics.

  • Promises of high returns, with little or no risk, are classic warning signs of fraud. Every investment carries some degree of risk, and the potential for greater returns comes with greater risk.  Investors should be skeptical of any investment that is said to have no risks.
  • Not in Good Standing. Any company, including limited liability companies and limited partnerships, seeking funding should be listed as active or in good standing in the country where it was incorporated or formed.  Every company must file and pay annual taxes in order to maintain its good standing.  Each country maintains a publicly accessible online database of its companies. Potential investors should be wary if the company you are being asked to invest in cannot be found in the records of the state it claims to have been formed in or if it’s not listed as active or in good standing.