Greed: Investment Fraud in Canada and Around the Globe

Duncan McDowall is a professor of history at Carleton University and the
author of Quick to the Frontier: Canada’s Royal Bank.

“Get rich quick” might well serve as our national motto. Every week
we hear of the small risk-taker who chanced his savings on a “penny
stock”—a stake in some purportedly mineral-rich hole in the ground
in the Canadian outback—and came up a millionaire. For another, the
road to riches began with the purchase of gemstones or strategic metals,
conveniently arranged by telephone and cheque. Like in most Eldorado
tales, there is a little truth and much cruel deception in these stories
we so fervently want to believe. In Greed, journalist Deborah Thompson
attempts—by implying that investment fraud is a kind of cancer gnawing
at our financial integrity—to pull back the curtain that shrouds it in
our society.

Caveat emptor: this book promises much more than it delivers. Thompson,
a one-time banker turned journalist, tackles the “fraudsters” by
presenting a series of chapter-length vignettes of recent fraud in
Canada. There are details of “boiler room” sales of penny stocks to
gullible rural Canadians, gemstone swindles, crooked investment dealers,
and deceptive grain traders. With uncanny bad luck, Thompson went to
press just as the Bre–X scandal was breaking, and so the leading fraud
of the year—perhaps of the decade—goes unmentioned. What we in fact
get is the warmed-over retelling of frauds that have already been well
reported in the daily press, with little addition of a broader, more
analytical perspective. Despite its title, there is little global
context here, no sense of the forces—the electronic globalization of
finance, the emergence of derivatives, changes in the regulatory
climate, and so on—that make investment fraud possible. There is no
historical perspective, no sense that Canadians have long been victims
of greed merchants who play on a belief that Canada is a land of easy
mineral wealth. A brief introduction and a very cursory conclusion
provide only superficial analysis of present trends. A forensic
psychiatrist at the Clark Institute in Toronto, for instance, reveals to
us that fraudsters do what they do because they are “greedy.”
Thompson makes some familiar suggestions—for instance, ending the
provincial mish-mash of investment industry regulation—that might curb
future fraud. She also gives us a list of securities commission
telephone numbers for those who suspect they are being fleeced. There
is, however, more substance and reflection in the daily financial press
than in these pages. Nor does the writing elevate the content; it is
prosaic and prone to the regurgitation of long quotations. The term
“unsuspecting” may therefore be applied to readers with equal
relevance as to investors.