The Investment Counsel Association of Canada has created an investment firm selection checklist to help investors spot potential fraud.

First, ask if the individual or company whose business is trading, underwriting or advising in securities is registered with one or more provincial securities commissions. If so, exactly which services are authorized?

Find out if the individual or company uses an independent custodian such as a Canadian chartered bank, to hold client assets.

Ask about an advisor's credentials and qualifications and beware of the potential red flag if an advisor or firm guarantees a high rate of return at zero or low risk.

Finally, the Association suggests seeing whether the firm has been audited (by a reputable auditor) and to what level of compliance?