Fraud in securities investment is a worldwide phenomenon that can cause serious damage to investors. For this reason, supervisory authorities and judicial authorities have been strengthening investigation means and crime punishment.
The increasing sophistication of the means used for contacting and persuading investors (letter, telephone and especially the Internet), as well as the diversity of places wherefrom the perpetrators of these crimes operate, has complicated the task that authorities are faced with and, in many cases, has made the punishment and compensation of defrauded investors, unfeasible.
The financial digitisation phenomenon and the increasing use of technological means by investors for their investment options for an easier and more convenient access to a wider range of investment solutions, has conversely seen an increase in fraudulent schemes in financial investments.
Despite the close international cooperation in combating fraud networks operating in various countries, the existence of "non-cooperative nations", tax havens or offshores, often place capital gains obtained from fraudulent activities beyond the reach of financial sector supervisors and judicial authorities.
Suspected fraud and most common mechanisms
To better identify possible fraud situations, below are behaviours that show securities fraud and the fraud mechanisms that are mostly commonly used:
- Behaviours showing securities fraud
- Most common financial fraud mechanisms:
- Investor procedures to be adopted by investors to prevent fraud
How do you deal with suspected fraud?
If you are aware of facts, evidence or information on entities operating in Portugal without due authorisation or registration with the CMVM, or without qualifications for that or with a high probability, they may be acting and injuring investors, in violation of the rules provided in the Securities Code and respective regulations, as well as the violation of duties enshrined in other national or European Union laws related to the financial instruments market, you can report them to the CMVM. For this purpose, the following form is available:
The communication should contain, whenever possible or applicable, a detailed explanation of the likely infraction, including information concerning dates, identification of the individuals and entities involved, identification of the financial instruments involved and description of the entity's confirmation of knowledge. It should also be supported, if possible, with documentation.
If you suspect that you are victim of fraud, lodge a complaint or suit with other competent authorities, namely, the Judiciary Police and/or the Public Prosecutor's Office - Central Department of Investigation and Criminal Action.
Step to take if you suspect you are being a victim of fraud
If you suspect that you may be a victim of scam or fraud associated with investment in financial instruments, please request clarification from the CMVM through its Investor Support Line (Toll-free number: 800 205 339).