A new study conducted on behalf of the Canadian Securities Administrators shows that one in 20 Canadians is a victim of investment fraud.

The study, released today in conjunction with October being Investor Education Month, estimates that over 1 million adult Canadians have been the victim of investment fraud and that half these victims were introduced to the fraud through an existing relationship of trust, such as a friend, family member or work colleague.

Not only do victims of investment fraud lose money, but the study also found that (especially among those who lost more than $10,000) the effects go beyond trust. Victims of investment fraud reported negative impacts to their health, as well as to their social connections.

Also, over 90% of Canadians believe the impact of investment fraud is as serious as that of violent crimes, but most people think the criminal justice system as a whole does not treat investment fraud as seriously as other crimes.

People do believe that reporting investment fraud is worth the effort, yet few people actually report these crimes, it found. Just 17% report their most recent experience with attempted fraud to authorities (the RCMP, local police, legal community, investment industry, consumer advocacy groups, and securities regulators). Of those who were victimized, only 22% of one-time victims and 28% of repeat victims reported their most recent fraud experience.

The study finds that investment fraud often results in a loss of trust between victims and those close to them, as well as a loss of confidence in the system as a whole. In fact, 68% of fraud victims report they are less likely to trust people in general and 63% report they are less willing to make future investments.

“The first casualty of fraud is the victim’s trust in other people, investments and the financial markets,” says CSA chairman Jean St-Gelais. “As regulators, we are concerned when investors lack the trust to invest again in our financial markets. We must continue to educate people on how to recognize, avoid and report investment fraud.”

The CSA commissioned Innovative Research Group Inc., a national public opinion research firm, to conduct the study, between July 16 and July 31. Results from the survey are based on 5,868 completed online interviews of Canadians, 18 years of age or older.