Taking Investor Fraud Seriously

Investors are not protected enough from financial fraud in North America. Here in Canada, this country has had its fair share of spectacular frauds that rivals anything in the United States from Earl Jones to Norbourg to Triglobal.

FAIR Canada (Canadian Foundation for Advancement of Investor Rights) is an advocacy group that is trying to change this. It proposes its own recommendations on how to combat fraud.

Consequences of fraud:

"As of July 2009, an estimated 1.3 million Canadians have been victims of fraud at some point during their lives. In many cases, investors lose a significant part of or their entire life savings. The impact on their lives is devastating and irreversible. These crimes impact the financial, emotional, psychological and physical health of the victims and seed doubts about the security and fairness of our financial system.""Half of Canadian fraud victims say that fraud caused them not to trust "…the way investments are run and regulated…"

Lack of coordination or cooperation in a fragmented landscape:

"The Canadian regulatory framework for regulation of investments is complex and fragmented. First, there are thirteen provincial and territorial statutory securities regulators and two national self regulatory organizations. In addition, there are many other provincial
and national regulators that are involved in regulating financial institutions and investment products. When it comes to enforcement, the complexity and fragmentation gets much worse, as it includes provincial crown prosecutors and local and provincial police forces as well as the RCMP and its Integrated Market Enforcement Teams ("IMET"s) which were set up to combat commercial crime. The fragmented system, the combined delays in the justice system and difficulty in tracing assets make these cases complex and time-consuming, which results in most cases taking years to resolve."3. Victims of fraud report high incidences of stress, anger, depression, loss and isolation.4 Nine in ten Canadians agree that "[t]he impact of investment fraud can be just as serious as the impact of crimes like robbery and assault."

"With this bewildering array of government, regulators and police, it appears that no one has ultimate responsibility for prevention, detection and prosecution of investment frauds and scams. An investor who has lost $50,000 in an investment scam may start by calling the local police who may refer the victim to the provincial police, a commercial crime unit, the RCMP or IMET or a provincial securities commission. The victim may contact each of these agencies only to find that none of them wants to assume responsibility for investigating and prosecuting the investment scam. Even if some agency is willing to investigate, the investigation may take many years and the crown prosecutor may decide not to prosecute due to lack of resources."

Visit FAIR Canada here.

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