ASIC sounds warning around high-yield bond scams

The corporate regulator has warned of a rise in scammers targeting Australian investors by pretending to be associated with well-known domestic and international financial service firms.

The high-yield bond scams usually occur after an investor completes an online enquiry form expressing interest in receiving investment advice, often via a third party or comparison site.

Scammers pretend to be associated with well-known domestic and international financial service firms and send professional-looking fake prospectuses with unrealistically high returns.

ASIC also notes that other common tactics include falsely claiming investor funds will be pooled to invest in government bonds or the bonds of companies with AAA credit ratings, and falsely claiming the purchase price of the bonds is protected under the Commonwealth Governments Financial Claims Scheme.

ASIC acting chair Karen Chester has urged investors to be wary of claims that are “too good to be true”, noting that money lost to such scams are hard to retrieve, especially if scammers are based outside Australia.

“Interest rates globally are currently extremely low and expected to remain so for some time. If you see or receive offers of high-yield bonds, they are either high-risk or they may simply be bogus and a scam,” Ms Chester said.

“Investors searching for income-generating investments are at risk of being duped into buying these imposter bonds. Any prospectus offering incredible returns in today’s economic environment is likely to be just that: incredible.

“ASIC warns investors to be sceptical and make proper inquiries before investing.”

Ms Chester has also urged Australian investors to be careful with sharing their personal information online.

“We remind investors to check that they are actually dealing with the company they think they are dealing with,” she said.

“Do not share personal information online unless you can verify who is using the information and how it will be used. We are seeing a rise in suspicious websites that are simply lead generators for scammers.

“Ensuring investment products are true-to-label is front and centre for ASIC. While true-to-label covers all aspects of the investment product being offered, the foundation stone is basic truthfulness, and none more so than that the product issuer is actually who they say they are. This conduct is beyond not being true-to-label; it’s bogus-to-label.”

Jotham Lian 
29 January 2021 
accountantsdaily.com.au