Recent events have made the public more aware of the potential for losses in investment portfolios. Extreme cases, such as those involving Ponzi schemes, have been well publicized. All investors can be vulnerable to unsound investing, but the aging and elderly are particularly vulnerable and, for that reason, can also be a target of fraud.
The FINRA Investor Education Foundation is now joining up with the Stanford University Center on Longevity to create the Research Center on the Prevention of Financial Fraud. The Research Center will bring together many experts and disciplines, such as those studying fraud, law enforcement and others to deal with this problem.
The good news is that although it is easier for those who are involved in fraud to reach out to vulnerable and uninformed investors, there are more refined ways to detect this activity. As noted in the joint press release issued late last week, fraudulent practices such as Ponzi schemes, online phishing scams and other scams are more widespread given the technologies available to those wanting to cause harm. But the new effort intends to "support and consolidate scientific research and connect this research to practical prevention and detection efforts."
While recognizing that investors of all ages can be at risk for fraud, the reality is that with an aging population, this activity may well increase. Dr. Laura Carstensen, Stanford Professor in Public Policy, Professor of Psychology, and Founding Director of the Stanford Center on Longevity noted that " '[w]ith the Center on Longevity's dedication to preserving financial security throughout our extended life spans, and with the support of the FINRA Foundation's ongoing commitment to protecting individuals from fraud, the new Research Center on the Prevention of Financial Fraud seeks to enhance the financial security of Americans.' " According to Dr. Carstensen, the intention is to "deliver practical, cutting-edge research to policymakers and law enforcement."
The Research Center has lined up an advisory council with expertise across many disciplines, including business, economics and psychology as well as representatives from AARP, the FINRA Foundation and the SEC. The Research Center's first conference will take place in November of this year in Washington D.C. and is entitled: The State and Future of Financial Fraud. Many disciplines are expected to join together at this conference to advance the efforts that will be at the core of the Research Center's work.
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