NCJ Number
126732
Date Published
Unknown
Length
32 pages
Annotation
This paper explores two aspects of the promotion and sale of contractual plans through which clients agree to purchase mutual funds: whether the contractual plans are a suitable investment vehicle and whether the brokerage firm, First Investors, and its representatives are guilty of product misrepresentation.
Abstract
An analysis of quantitative data suggests a low rate of persistence in following through with contractual plan savings programs among First Investor clients. As a result, these clients lose money and the average commission rate for the brokerage firm is over 40 percent, suggesting that contractual plans are not a suitable investment vehicle. An analysis of qualitative data indicates that the contractual plan programs are misrepresented by sales officers. The paper argues that, by fitting a broad definition of "crime," these questionable practices economically abuse the client and constitute a new type of white collar crime termed "collective corporate theft." (Author abstract modified)