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Investors Lost Millions and Fraud Charges Laid

Investors Lost Millions and Fraud Charges Laid

July 12, 2022

Investors lost millions and the lesson learned is a key to investing is diversification, writes Peter Watson.

The RCMP opened an investigation in 2016 as a result of investor complaints about Fortress Real Developments. Two senior executives of that firm were charged with fraud.

According to a news release by the RCMP, “Allegations were received that the company was fraudulently obtaining investments in a syndicated mortgage investment scheme.”

Investing has many different types of risk. That is the reality of investing.

However, there is one thing you do control: Diversification. The simplest way to describe diversification is do not put all your eggs in one basket.

For a Fortress investor who invested a small amount of their assets in that investment, there will be disappointment at the losses suffered. Plus, anger that they were a victim of fraud.

For a person who invested most of their life savings, there would be devastation. How will they maintain their current lifestyle after the money is gone?

You cannot control the future. That is referred to as assuming investment risk. You can control how much you spread investment risk through strong diversification.

The CBC coverage included a story of a 75-year-old retiree having to return to work because of his losses. There are likely hundreds of stories of pending financial hardship.

This example of the allegations of fraud can be a reminder to us all. Diversification is a key element of investing.

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com