Low-interest investments are now an opportunity for fraudsters, says Quebec securities regulator

Quebec's low-interest environment is causing an increase in fraud risk, says Authorit des marchs financier CEO Louis Morisset.

MONTREAL – The head of Quebec’s financial regulator says the current low-interest environment causes an increase in fraud risk as investors search for higher margins.

“Ten years ago, scammers could attract people by promising 20 percent interest, for instance. In today’s world with a very low rate of interest, you can be promised three per cent and it could be a scam,”?said Authorit des marchs financier CEO Louis Morisset throughout an interview with the Financial Post on the sidelines from the?International Economic Forum from the Americas in Montreal on Monday.

“The quest for yield is there. People are looking for ways to invest and also the risks are higher.”

Ten years back 9,200 Quebec investors lost what is now estimated at a lot more than $100 million within the Norbourg Financial Group scandal. Vincent Lacroix diverted money from a trust fund for personal interests within the biggest financial scandal the province has faced and something of the largest in Canadian history.

Frankly, there’s nothing we can do to prevent it

Morisset says that the AMF staff have tripled in dimensions since then, growing from 47 employees in 2004 to in excess of 150 today.

In 2010, the organization launched a cyber risk unit, a team that flags potential online fraud in Quebec.

Recently, the AMF put out a warning against exchanging binary options after seeing suspicious activity emerging in the province, targeting investors looking for higher-yield investments.

However, Morisset says that with only five full-time staff handling daily cyber attacks, it’s mostly up to businesses themselves to protect against the risk.

“Frankly, there’s nothing we can do to prevent it,” he said.