Investors rights group FAIR Canada has raised questions about how well the current regulatory regime protects Canadians from investment fraud.
In a research report release on August 11, FAIR points out that Canada lacks a national framework to collect, track, and report investment fraud complaints. It also notes that a significant portion of securities fraud enforcement cases involve unregistered individuals, but that few individual investors even verify an advisor’s registration prior to investing. "The current registration check system is not user-friendly for investors," says FAIR.
The organization lists a number of ways the current system could be improved and recommends, among other things, better data collection, improved coordination among the various regulatory bodies, and offering victims more help to obtain recourse.
"We found a surprisingly limited amount of meaningful, publically-available information relating to the instance and prevalence of investment fraud in Canada. We are concerned that no one has a reliable estimate of the amount of investment fraud perpetrated in Canada," comments FAIR Canada executive director Neil Gross. "Without such information, it is difficult to evaluate how well investors are being protected. Certainly police and regulatory resources cannot be optimally prioritized without good data."