Does anyone have REAL knowleges of the law in Canada regarding investing in HYIP's?

On another forum someone suggested that investing in a HYIP is illegal for Canadians. I have contacted various authorities, but would like to hear from other people who may have experienced trouble for having put their money where an authority may say it should not go.

Personally I don't see the problem if the investor is prepared to take the risk is declaring all earnings to his tax authority. You would think they would be happy to have money flowing in from another country.

I will post here when I learn more, but would like any other input.

Org.

Hey Organic!!

This is a question that I would like a clear answer to as well,

I've asked some Canadians on MMG though not a huge lot

and they use debit cards to withdraw. That's all I know.

In mexico there's no such law, they don't even know what it is!

Well I am still hot on the trail of good answer, but that answer is more elusive than the Yeti

Here is a copy of a post I made on another forum:

OK - let's try and striaghten things out here a little regarding the legality of HYIP income.

I received an email reply from the commission, which wasn't particularly helpful, so I phoned them and had a lengthy chat and guided tour of the BC securities Commission website.

This is the email reply I received:

Thank you for contacting the British Columbia Securities Commission (BCSC).

The British Columbia Securities Act requires that individuals or companies that trade in securities must be registered or exempt from the registration requirements in British Columbia. Our registration database is available on our website at:
<http://www.bcsc.bc.ca/bcscdb/Registration/RegDefault.asp>.

In addition, securities that are offered to British Columbia residents must comply with the prospectus requirements or qualify under an exemption from the prospectus requirements. You can contact our Inquiries Group for assistance in determining if your high-yield investment programs have filed anything with the BCSC in relation to a distribution of securities,
telephone: in Vancouver (604) 899-6607 or toll free 1-800-373-6393.

Please see our website for investor alerts and a link to a new website we have created to help investors called "InvestRight", link:
<http://www.bcsc.bc.ca/investors.aspx>.

Please contact us again if you require further assistance.

British Columbia Securities Commission
PO Box 10142, Pacific Centre
701 West Georgia Street
Vancouver, BC V7Y 1L2
Inquiries@bcsc.bc.ca

604 899-6500 - Main switchboard
604 899-6854 - Inquiries or Complaints
1 800 373-6393 - Toll Free in BC and Alberta
604 899-6506 - Fax


Not too much to go there, except for the fact that they are talking about securities.

Just reading the BCSC website, the references are all to Shares, stocks, bonds, mutual funds, securities, futures etc., with a few references to FOREX.

What came out in conversation is that the figures they are talking about are DEPOSITS of $100,000 and upwards.

I was quite frank on the phone and asked "is autosurfing legal in Canada?"

reply - "Auto- what?"

They had never heard of autosurfing, HYIP games, small time HYIP's....

Even private clubs were discussed, but in figures circa. $150,000 invested.

So, for example, can someone in the USA run a private Forex club and permit Canadians to take part?

I was told both yes and no. The operator would have to apply to BCSC for an investors licence. (this all aludes to British Columbia, but at this stage of the game we should assume that the provinces are similar - we'll worry about the minor details later)

Well I don't imagine there are many small HYIP's prepared to pay for provincial licensing. However, they can apply for exemption!!!

Perhaps this is the crux - a company external to Canada cannot solicit within Canada unless they are covered by a licence or an exemption.

Do they have to apply for the exeption before soliciting? My understanding is that they don't. However, if they are approached by the Securities Commission they should know which exemption (under the title of Offering memorandums) they are applying for.

There are many exemptions.

If you read through all of the news and bulletins on the BCSC website, one thing is clear - they are looking at BIG money.

Autosurfing apparently would fall under the completely different category of 'employment'.

One thing we can be sure of - ambiguity!

Ambiguity is the nature of the legal system. They even write the laws without punctuation to enable interpretation in many different ways until such time as the law is tested and proven in court.

Bottom line - None of what I have said constitutes legal advice or accurate definition - it is my interpretation. However, I am happy to continue along this path for now and to keep my financial records detailed and accurate.

If we just think back to when 12DP were pulled over - it looked like the 'doo-doo' had really hit the fan!! After the initial panic with hundreds of autosurfs changing their scripts and wording, it all fell back to normal again. The US SEC knows about this industry and perhaps is just waiting for another company to get as big as 12DP - It is simply not worth their while otherwise.

Do we have a tax specialist in our midst? more information would be really useful. I will continue to research and post anything new that I find, but this is a little bit of gristle to chew on for now.

Since then it looks like a reasonable option for most of the programmes is to class your deposits as loans and what you earn as interest on the loans.

I will keep searching and keep this thread updated