The demographic profile of victims of investment fraud: an update

Abstract

Purpose This study aims to examine the demographic factors of investors, contributing to financial victimization that occurs in Canada from June of 2008 to December of 2019. Design/methodology/approach In all 235 cases disclosing the details of financial crime victims are collected from the Industry Regulatory Organization of Canada (IIROC) enforcement platform between June of 2009 and December of 2019 for the analysis. The study used a descriptive analysis to showcase the demographic characteristics of investors who have been victims of financial crimes in Canada. Findings The findings indicate that these investors of age 60 and above were more likely to fall prey to various types of financial crime. The results also disclosed that retirees and investors with limited investment knowledge increase the probability of being vulnerable to the perpetrators than others. Research limitations/implications Overall, the study helps regulators in the securities industry gain insights into demographic portraits of the more vulnerable investors. Hence, more precautionary measures could pitch into these concerns to protect specific subsets of investors from investment fraud. Originality/value Individuals who are more vulnerable to investment fraud might not be entirely comparable with the stereotypical victims that most studies portray. The research gap could cause individual investors who appear to be at lower risk to unconsciously fall prey to investment fraud. The IIROC study, detailing the demographic factors of victims, can fill the gap and improve understanding of the tendency of victims.

Who Is Next? A Study on Victims of Financial Fraud in Japan

“…Diversity has also been reported in the association between age and fraud victims across types of fraud. Lokanan and Liu (2020) found that investors aged 60 years and above are more likely to be victims of financial frauds. Lokanan (2014) further argued that people who are retired and have limited investment knowledge are the most vulnerable to investment fraud.…”

From IDA to IIROC: Has self‐regulation in the Canadian investment industry evolved?

“…The most frequent type of offence, “unsuitable recommendations” made against the appropriate risk tolerance of the clients for profit maximization, is concerning because it involves an explicit abuse of the trust the client places in the financial adviser. Lokanan (2014) study of investor fraud in Canada found that 63% of the offenders were either relatives or friends of the victims. Having a close relationship with the adviser can be tricky because personal issues may influence professional decisions, and simple tasks such as the negotiation of fees are difficult, with family or friends expecting to pay less than regular clients.…”

Financial Exploitation in Canada: A Predictive Model using ML and AI

“…This is when a long-term relationship with the financial advisors reduces the risk of financial exploitation and fraud (Lokanan & Liu, 2021), which again can be debatable. The role of long-term relationships with the offenders has mixed evidence of retaining (Lokanan & Liu, 2021) and invading trust (Lokanan, 2014;DeLiema, 2018). The dilution of individual factors (wealth and health) and social factors (far and near relations) feed into the confidence of the offender and encourage criminogenic tendencies.…”