Authors: Mark Lokanan
Publishing Journal: Journal of Financial Research
Purpose: The purpose of this study is to examine the demographic characteristics of investors who have been victims of investment fraud in Canada from 1984 to 2008.
Design/methodology/approach: Data for this study come from the Investment Dealers Association’s tribunal cases that were decided between 1984 and June of 2008. The cases were retrieved from the Securities Regulation Tribunal Decisions database in Quicklaw. Data were collected to examine the demographic profiles of the investors.
Findings: The findings indicate that the victims were not particularly rich and a significant proportion borrowed money and opened margin accounts to invest. Those most vulnerable were investors who were retired and had limited investment knowledge. Many also dipped into their savings to fund their future retirement needs.
Practical Implications: The study opens an avenue for ordinary users of financial information to process the data and question the validity of the numbers presented by listed firms. Furthermore, if fraud information is available, similar research can be conducted to examine the tendency for companies with anomalous financial reports to commit fraud.
Originality/Value: This is the first study of its kind in Canada that provides a detailed demographic profile of victims of investment fraud. For the first time, data are available to show the occupational classifications, types of accounts and investment objectives of investors who were victims of investment fraud.