Retail Investors and Investment Fraud Victims: Is There a Connection?

Authors

  • Christopher Rand University of California, Berkeley Extension
  • Melisande McCrae The American College of Financial Services
  • Jason Martin Swarthmore College

DOI:

https://doi.org/10.61190/fsr.v33i1.3343

Keywords:

investment fraud, investor confidence, investor behavior, investor attitudes, investor knowledge

Abstract

This study analyzed specific characteristics of investment fraud victims. Logistic regressions on a national sample of retail investors revealed that overconfident and financially literate investors shared several characteristics with victims of investment fraud. While overconfident investors were the most comfortable with market regulation and making investment decisions that assumed high amounts of risk relative to investment returns, financially literate investors surpassed them in the frequency of annual trading and portfolio allocation to stocks. Surprisingly, overconfident investors favored due diligence via background checks on investment professionals, while financially literate investors did not. Overall, males and younger investors tended to share characteristics with investment fraud victims.

Author Biographies

Melisande McCrae, The American College of Financial Services

Assistant Professor, Financial Psychology, The American College of Financial Services

Jason Martin, Swarthmore College

Associate Director for Institutional Analysis and Assessment

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Published

2025-02-28

How to Cite

Rand, C., McCrae, M., & Martin, J. (2025). Retail Investors and Investment Fraud Victims: Is There a Connection?. Financial Services Review, 33(1), 102–119. https://doi.org/10.61190/fsr.v33i1.3343

Issue

Vol. 33 No. 1 (2025): Financial Services Review

Section

New Original Submission

License

Copyright (c) 2024 Christopher Rand, Melisande McCrae, Jason Martin

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