FR06/2015 Survey on Anti-Fraud Messaging

Survey on Anti-F raud Messaging Final Report THE BOARD OF THE INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS FR06/2015 May 2015 Copies of publications are available from: The International Organization of Securities Commissions website www.iosco.org © International Organization of Securities Commissions 2015. All rights reserved. Brief excerpts may be reproduced or translated provided the source is stated. Statement by IOSCO: Certain IOSCO authorities may consider rule proposals or standards that relate to the substance of this report. These authorities provided information to IOSCO or otherwise participated in the preparation of this report, but their participation should not be viewed as an expression of a judgment by these authorities regarding their current or future regulatory proposals or of their rulemaking or standards implementation work. This report thus does not reflect a judgment by, or limit the choices of, these authorities with regard to their proposed or final versions of their rules or standards. ii Report of IOSCO Committee 8 on Retail Investors: Survey on Anti-fraud Messaging Table of Contents Introduction Executive Summary .....................................................................................................1 Background ..................................................................................................................2 Format ...........................................................................................................................3 1. General 1.1 Types of fraudulent securities offerings .........................................................4 1.2 Common characteristics of fraudulent securities offerings .........................6 1.3 Characteristics of victims of investment fraud .............................................9 2. Content of Anti-fraud Messaging 2.1 Anti-fraud messages.......................................................................................10 2.2 Case Study: Persuasion tactics .....................................................................11 2.3 Checking registration status of investment professionals ..........................12 2.4 Checking registration status of investment products .................................14 3. Delivery of Anti-fraud Messaging 3.1 Methods used to deliver anti-fraud messaging ............................................15 3.2 Use of different communication channels to reach target audiences ........18 3.3 Partnerships and other programs ................................................................19 3.4 Case Study: Evidence-based multimedia campaigns.................................19 3.5 Creative and innovative delivery methods ..................................................23 4. Research, Evaluation, and Effectiveness 4.1 Goals and objectives ......................................................................................24 4.2 Use of complaint data ....................................................................................25 4.3 Evaluating effectiveness of anti-fraud strategies ........................................26 4.4 Characteristics of effective messages ...........................................................28 4.5 Characteristics of effective delivery methods ..............................................29 4.6 Barriers to effective fraud prevention ..........................................................30 4.7 Surprises .........................................................................................................31 5. Role of Anti-fraud Messaging in Investor Education and Overall Impact ................32 6. Areas for Improvement ...................................................................................................33 iii 7. Conclusion ........................................................................................................................34 Appendix A: Survey Questionnaire Appendix B: Glossary Appendix C: Research Cited Appendix D: Acronyms and List of Website Resources for Anti-fraud Messaging iv Introduction Executive Summary Losses from investment fraud cause severe financial and emotional harm to investors.1 Given the magnitude of the harm, IOSCO Committee 8 on Retail Investors (C8) determined to poll its members on the strategies they use to educate individual investors about protecting themselves against investment fraud. The goal of the project is to provide information that may help IOSCO members identify methods of educating investors about investment fraud that resonate with individual investors and offer the most potential for behavior change. The fact-finding survey presented to C8 members (Appendix A) inquired