How To Spot a Legitimate Investment Company – Keeping Your Funds Safe Online

In 2017, Kiwis lost a combined total of $10.1m dollars in reported scams online, according to Netsafe – NZ’s online safety organisation. Of that number, the single biggest loss was an investment company scam which resulted in $480,000 being defrauded.

At PMG our vision is to be NZ’s most trusted funds and property managers, here are our tips on how to sort the wheat from the chaff:

TIPS

1. The Manager of an investment scheme should be approachable, so speak to them directly about the investment(s) they offer.
2. If you have been targeted on or offline by an unfamiliar investment opportunity, do your research about the entity and the directors behind it first. If they don’t have a website or it’s very basic (i.e. does not look professional), that’s your first red flag that it is not legitimate.
3. If you know them, search the names of the directors and management team in Google, LinkedIn and / or Facebook, to give you a level of comfort these individuals are real.
4. If an investment firm or scheme does not comply with any of the following points then you should question the providers/managers and the offer. You can also check with the regulating body, which in our case is the Financial Markets Authority (FMA).

• Is the investment firm licensed by a regulatory body? The FMA provides a database of licensed product providers, funds managers, and investment schemes that investors should check.
• Does the firm have a statutory supervisor in place? Most investment providers are required to have one.
• Does the firm or scheme follow stringent anti-money laundering and counter-financing of terrorism rules which include identity verification and proof of the source of funds for new clients?
• Does the manager issue a product disclosure statement (PDS) or information memorandum (IM) for all retail and wholesale investment offers and /or schemes which are required by the FMA?
• Does the scheme manager have audited financial accounts? If so, check with the accounting firm who did them, to ensure they did indeed prepare the accounts for the scheme.
• Will the provider or manager provide the names and contact details of existing investors who have invested with the firm for a substantial period of time? PMG would happily do this.
• Does the manager offer a registered dispute resolution scheme, like PMG provides?
• How long has the scheme manager been in existence and how are they are remunerated? i.e. there should be an incentive linked to the scheme’s performance and track record
• What level of transparency does the manager provide on the performance of the investment(s)?