Investment scams targeting SMSFs, consider before investing

We have noticed that an alarming number of our self-managed superannuation fund (SMSF) clients are falling victim to investment scams in recent times.

Generally, investors are being lured into a variety of scams that are offering:

  • Quick and easy investment returns
  • Taxation benefits
  • Higher than market investments returns
  • Low risk investment opportunity with:
    • Full refund at any time
    • 'Guaranteed' returns
    • Transaction “transparency”
    • Endorsed by a reputable organisation or high profile individual.

What can you do to determine if an investment proposal is a scam?

Our experts suggest asking the following questions and request information when approached by a potential investee, including:

  • Does your company have an Australian financial services (AFS) licence and what is the licence number?
  • Does your company have an Australian Company Number (ACN) and an Australian Business Number (ABN)?
  • What is your name and identification (ID) number?
  • Where is your company domiciled?  
  • What is your company’s street address?
  • Can you provide me a copy of your Financial Services Guide (FSG)?
  • Is your investing prospectus registered with the Australian Securities and Investment Commission (ASIC)?

If they try to avoid answering your questions, it is likely the proposal is a scam. You should stop dealing with the person and company immediately. Delete and block them on your email account and social media channels.

Caution: even if they can answer these questions, it does not always mean the investment is legitimate.

Case Study 1: An overseas investment house with a high cash rate

Jade was looking for better returns for her SMSF, so did some research on Google. Jade found a ‘reputable’ London-based investment house offering seven per cent above the best cash rate that she could find in Australia.

Initially, Jade transferred $50,000 from her SMSF to the overseas investment house. She then received an investment certificate confirming that the SMSFs $50,000 had been received and applied as per her instructions.

One week later, Jade received an unbelievable offer of 8.5 per cent on top of the best cash rate available in Australia, contingent on her transferring $100,000 within 24 hours.

A month passed and Jade had heard nothing from the London investment house. Jade then contacted them by email and telephone but was not able to illicit a response.

Eventually after numerous telephone calls, Jade made contact with the investment manager. After a heated exchange, Jade was advised that she needed to transfer a further $50,000 or she would never see any of her money again.

Sadly, Jade complied and ended up transferring a further $50,000.

Jade came to us feeling very embarrassed and divulged her story.

An investigation by BDO’s Forensic Services team concluded that the company did not exist. Jade had fallen foul of an elaborate investment scheme. 

Case Study 2: Catfishes and fake online profiles

Reece lost his wife in January 2018 after a short battle with cancer.

In April 2020, during the height of the COVID-19 lockdowns, Reece was feeling lonely and isolated. He turned to a popular dating application on the internet.

Before too long, Reece was madly in love with Olive whom he met online. Who would have thought he would have a second chance at love, especially as he was in his early 70s?

Reece had significant assets in his SMSF which he revealed to Olive during their many midnight chats online.

Olive was not financially independent and had significant debts that she needed to clear in the United Kingdom (UK), before she could relocate to Australia to join Reece.

More than $700,000 was transferred from Reece’s SMSF bank account to Olive over a period of seven months.

Despite all of his attempts, Reece has not been able to contact Olive.

The Australian Federal Police has confirmed that Reece has also been the victim of a scam.

Reece has resolved that he will never get to see Olive nor his $700,000 in retirement savings.

An ACCC media release from 6 June 2022, provides the following guidance:

Warning signs 

  • False advertisements – including fake celebrity endorsements and testimonies.
  • Cold calls from a stockbroker, incentivising your investment.
  • Callers offering to assist you with opening your cryptocurrency wallet, often done so by remote access.
  • Encouragement to invest, including early withdrawal of superannuation.
  • Sense of urgency – claims of a volatile market and possible missed opportunity.
  • Promises of a guaranteed return on investment.
  • How to protect yourself

  • If the returns sound too good to be true, they probably are.
  • Avoid giving untrusted 'brokers' remote access to your computer or mobile device.
  • Seek independent financial advice from a registered financial adviser via
  • Never provide personal information, bank account details or balances to a third party.

If you have any questions about your retirement savings, please contact your BDO adviser before you transfer any money from your SMSF.