Global Investment Fraud Breaks New Records

Jacob Maslow  |


Investment fraud is on the increase and we should be worried.

When Bernie Madoff carried off a $65 billion pyramid scam, it was thought that people would be a bit wiser and more vigilant to investment scams and frauds. Yet, global investment fraud is hitting new record levels.Worldwide fraud is costing an estimated £3.24 trillion every year. To put that in perspective, it is a sum equal to the combined Gross Domestic Product of both the UK and Italy.

In Australia, the Australian Competition and Consumer Commission (ACCC) reported over A$340 million was lost by Australian victims of fraud schemes last year, a A$40 million increase from the year before. And 2018 is not looking any better. In April alone, A$3.29 million was lost to investment frauds, an increase from the A$3.11 million scammed in March.

South Africa recently saw one of its biggest ever investment frauds. The Serious Economic Offenses Unit have begun investigating a company called Bitcaw Trading Company, with up to 30,000 people affected and over $80 million believed to have been scammed in an elaborate ponzi type scam involving a worthless crypto coin.

In the US where Enron's founder lost $74 billion and the ‘Wolf of Wall Street’ Jordan Belfort scammed $200 million, the Securities and Exchange Commission (SEC) have been kept busy with the rise of the Initial Coin Offering (ICO). Having battled binary options and forex fraud successfully over the last few years, the battleground has now moved to the crypto world.

US and Canada’s Regulators have been targeting cryptocurrency price manipulations as well as sharp increase in the launch of fraudulent ICOs. It is believed that 80% of all ICOs are scams, costing investors hundreds of millions of dollars in lost money. The SEC have aggressively targeting ICOs in the US, but despite some successes, are playing catch up most of the time.

However, there has been successes in combating investment fraud and bringing the scammers to justice. Meyer Wilson, one of the top legal firms specializing in investment fraud in the US, has been responsible for the recovery of $350 million for their clients. Meanwhile, the SEC, despite playing catch up have racked up some victories against scam ICOs having seen off the highly fraudulent binary options industry. In the UK, the Financial Conduct Authority (FCA) have an impressive record in preventing large scale investment fraud, whilst global regulatory bodies are slowly embracing the new wave of technology-based frauds.

There’s still a long way to go in beating the scammers, but battles are being won. However, the war against investment fraud will be a long and bloody war, with many casualties and victims of investment scams.

DISCLOSURE: The author does not own any stakes in the listed equities


The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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