'With Friends Like These...': Toward a More Efficacious Response to Affinity-Based Securities and Investment Fraud

58 Pages Posted: 31 Jul 2006

See all articles by Lisa M. Fairfax

Lisa M. Fairfax

University of Pennsylvania Carey Law School - Institute for Law and Economics

Abstract

This article highlights the increase in affinity fraud - securities and investment fraud targeting members of a particular racial or ethnic group perpetrated either by a member of that group or someone claiming to advance the groups' interests. Affinity fraud differs from other forms of securities fraud because perpetrators establish their credibility and the credibility of their investment schemes by appealing to the trust that group members share, often promising that some of the invested funds will be used to assist the group's church or ethnic community. This reliance on group trust and sense of community persuades otherwise cautious people to participate in these fraudulent investment schemes. These schemes fleece people out of millions of dollars and have drawn the concern of state regulators around the country, causing such regulators to rank it among the top five most problematic securities schemes. This Article argues that the fact that these securities schemes prey on people's charitable impulses and sense of group trust justifies enhancing the punishment of those who commit affinity fraud.

Keywords: securities fraud, investment fraud, affinity fraud

Suggested Citation

Fairfax, Lisa M., 'With Friends Like These...': Toward a More Efficacious Response to Affinity-Based Securities and Investment Fraud. Georgia Law Review, Vol. 36, p. 63, 2001, U of Maryland Legal Studies Research Paper No. 921074, Available at SSRN: https://ssrn.com/abstract=921074

Lisa M. Fairfax (Contact Author)

University of Pennsylvania Carey Law School - Institute for Law and Economics ( email )

3501 Sansom Street
University of Pennsylvania Carey School of Law
Philadelphia, PA 19104
United States
215-746-2243 (Phone)
215-573-2025 (Fax)

HOME PAGE: http://https://www.law.upenn.edu/faculty/fairfaxl

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
260
Abstract Views
2,943
Rank
214,112
PlumX Metrics