Beware of bogus bond funds, ASIC warns Aussies


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Bond investment scams are on the rise, warns the Australian Securities and Investment Commission (ASIC).

Scammers call up unsuspecting investors offering high-yield bonds. ASIC has been aware of two outfits running the scams here in Australia and two in the United Kingdom.

Earlier this month, IFM Investors had to release a statement saying it had been made aware that scammers were impersonating as IFM to steal personal data.

bond scams

The scam can come in many flavours. ASIC has outlined five common tactics investors should be aware of:

  • sending professional looking fake prospectuses with unrealistically high returns;
  • falsely stating the bonds are issued by prominent financial services firms when this is not true and there is no underlying investment;
  • falsely claiming investor funds will be pooled to invest in government bonds or the bonds of companies with AAA credit ratings;
  • falsely claiming the purchase price of the bonds is protected under the Commonwealth Governments Financial Claims Scheme; and
  • using contact details gathered online through fake investment comparison websites to call people and pressure them to invest or risk 'missing out'.

ASIC acting chair Karen Chester adds that investors should cast a suspicious eye on bond yields that are unusually high, meaning they're either a scam or carry high levels of risk.

"Investors searching for income-generating investments are at risk of being duped into buying these imposter bonds," she says.

"Any prospectus offering incredible returns in today's economic environment is likely to be just that: incredible."

The scam has already seen many investors fall victim.

"These bogus bond funds are raising not thousands, but millions of dollars from Australian investors.

"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."

In addition to lost money, investors duped by bond scams are exposed to identity theft.

"We remind investors to check that they are actually dealing with the company they think they are dealing with.

"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."

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David Thornton was a journalist at Money from September 2019 to November 2021. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.