Securities And Investment Fraud Criminology Essay

Securities And Investment Fraud Criminology EssayIt has been a long time since financial offensive has been identified and the personate of look for in this type of issue has been growing rapidly. Today this research provide covers a wide range of topic ranging from financial studies to social innuendo of the study as well as to research to prevention and best practices that may c be to stop this fast growing issue. This chapter will provide an overview of the squeeze of financial abhorrence, the steps used to address this problem and briefly assess the theories of about financial curse in the world.Definition and types of financial crimesThere is no broad concensus on the meaning of financial crime but it can be understood that it is any type of illegal activity that result in an stinting loss.Financial crimes, sometimes defined to as white collar crimes, argon nonviolent criminal acts comitted to gaine illegal monetary. According to the United Nation Office on Drug and ab horrence (UNODC) financial crime can be viewed as any non-violent crime that results in a financial loss which includes computer crime and dishonest practices. Financial crimes is a critical issue and it has likely devastating economic, security and social impact. It encourages drug dealers, terrorists, illegal arm dealer, corrupt public ordaineds and others to run low and expand their criminal enterprises.According to Petter Gottschalk, (2010), financial crime can be categoried in corruption, tommyrot, theft and manipulation . There are different types of financial crime. These types are as followsMoney LaunderingAccording to Jeffrey Simser, (2006), money laundering can be defined as a technique designed to make extracurricular acquisitive gains appear legitimate, usually by disguising the airscrews illegal provenance. In other words, perpetrators are trying to cover-up the monetary sources obtained from illegal transactions so that it port like it was acquired from legal sou rces. Commonly, according to (Schneider, 2004 Cassella, 2004), money laundering has been posit outd as a cycle taking guide in three different stops. Firstly, Placement, the stage at which illegal funds are introduced in the financial system mainly deposited in a bank thought.Layering, the stage of the process in which the property is moved around from bank to bank and its ownership and source is covered-up in battle array to keep it away from its illicit source and the final stage at which the property is re-introduced into the legitimate economy.EmbezzlementAccording to williams (2006), embezzlement can be defined as the dishonest appropriation to personal use or return of property or money en bank by another. The actor first comes into possession of the property with the permission of the owner. Embezzlement can often occur between trusted friends or even relatives, but also occurs in simple demarcationes as well. Conscientious examination of financial records by the fu nd owner can help reveal signs of embezzlement, such as missing funds, duplicated checks, or accounting errors.Credit placard fraudPickett and Pickett (2002) suggested that credit card fraud is the use of stolen credit card details to get access to the goods or services in the name of the cardholder. Sometimes a brand new credit card is falsified using cognise details. Cards can be stolen or details obtained from files that are not properly safe.Securities and investment fraudSecurities fraud is a type of financial crime that is involved in illegal manipulation of values of financial market. It includes insider trading, preferential rates, and misrepre directation of value. The types of misrepresentation implicated in this crime include providing false tuition and giving bad advice. Insider trading occurs when a person reveals study about an investment then uses the information to buy or sell shares with a business. discriminative rates and misrepresentation both implicate inf lating or deflating the value of stocks in baffle to manipulate the market.Investment Property is the Property sold as a certified investment with high returns. The victim is influenced to buy investment property with a property management firm that will deal all the contribute documents. The victim reassured and told that he or she has to do nothing other than be the buyer and borrower. Then the victim finds that the property was increased in value,no impart payments have ever been done, and any collected rents have been stolen as well.Identity theft and PhisingLaundon and Laudon (2010) defines identity theft as a crime in which a pretender gets personal information, such as social security identification numbers, drivers license numbers, or credit card, name, address, drivers license, date of birth, Social Security number, account information, account login credentials, or family identifiers to pretend to be someone else.According to Higgins et al., (2008), iIdentity theft is t he illegal use of anothers personal identifying information.It implicate financial or other personal information stolen with the intention of to be someone else.Phishing is defined as the technology or social engineering used to attract victims to reveal their personal information such as account numbers, login IDs, passwords, and other confirmable information that can then be exploited for illicit purposes, including identity theft. Phishing is most often commited through kettle of fish emails and spoofed websites.CounterfeitingCounterfeiting is a pernicious crime as it corrupts the monetary system. Counterfeiting implaicates the use of fake money, such as manufacturing falsely bills and coins with a more valuable version. Therefore, counterfeiting can destroy up the flow of inflation and deflation by adding more falsely money into a controlled system and also threaten global security, as these activities are sometimes committed by terrorists and other dangerous criminals to fina nce their activities or disguise their profits (Interpol, 2009).Mail FraudInternet sales or online auction fraud The perpetrator agrees to buy an item available for sale on the Internet or in an online auction. The seller is told that he or she will be sent an official check (e.g., cashiers check) via overnight mail. When the check arrives, it is several hundred or thousand dollars more than the agreed-upon selling price. The seller is instructed to deposit the check and refund the overpayment. The official check is subsequently returned as a counterfeit but the refund has already been sent. The seller is left with a loss, potentially of both the merchandise and the refund. brim FraudThis is criminal acts committed in connection with bankruptcy or liquidationproceedings. A person filing for bankruptcy or a business that has gone into liquidationcan hide assets after proceedings have been initiated, thereby preventing creditors fromcollecting their claims. However, most of the crimi nal acts are typically committed earlier bankruptcy/liquidation proceedings are initiated, e.g. the debtor has failed tokeep accounts or has unlawfully withdrawn money from the business (kokrim, 2008).Bribery and corruptionTHEORIES ON monetary CRIME WHAT ARE THE FACTORS INFLUENCING FINANCIAL CRIME?A theory is a forecasting or justification of a fact. According to Petter Gottschalk, (2010), the body of research of financial crime is divided into three branchesBehavioral theoriesAccording to Hansen (2009), distinction can be made between economic, business, and elite crimes. Participants employed in reputed financial institutions commit most of such crimes. Employees for their own benefits instead of for the business benefits, commit occupational or greatest crime. Hansen (2009) suggested that people commit crime because of low self-control. Duffield and Grabsky (2001) describe some of the key motivational and psychological factors that lead to financial crime. They stated that frau d can be explained by three factors1) An increased in do criminals,2) The availability of suitable funds, and3) The absence of security.As Nettler noticed the intensity of desire and the perception of luck are personality variables. The balance between desire and opportunity moves. Temptation to steal fluctuates with individual temperament and situation (Nettler 1974, p.75).Motivation is, therefore, a combination of an individuals personality and the opportunity which they get. Fraud is mainly committed by motivated and decided organized participants for the only reason financial benefitsGreedFraud is executed by motivated groups of organised actors determined only for financial profit. According to the Drugs and Crime Prevention Committee of Victoria,an increase in recent years of organised criminals in illicit and suspicious activity implicate mostly external attacks on banks, superannuation funds and business. Duffield Grabosky (2001) noted that greed lies at the heart of much dishonest activity in the society.Emerging Trends in ones lifestylePeople are convince to have recourse to financial crime due to the changes in financial condition that exceed their control. Unfortunately some are capitulated to commit illicit act to maintain a good standard of living.Financial StrainFinancial strain caused by gambling problem is an area of concern (Duffield Grabosky 2001). The court of suspicious drugs contributes also to financial stress on individuals who take part in them therefore they are tempted to commit crime in order to get money. According to the Drug and Crime Prevention of Victoria, relationship or marital breakdowns causes, both financial and emotional stress which can represent a jerky decrease in the standard of living of an indvidual together with a feeling of powerlessness and resentment, ones can have recourse to financial crime in order to earn a good living.PowerDuffield and Grabosky (2001) noted the desire some people have for power over others and over situations. In other words, the feeling of power over individual appears to be a determined force to perform illicit act by taking advantage on lightsome people.MisunderstandingsPoor communication can arise some form of dishonesty. According to Neville (2000), complaints have been made each year in Victoria against sollicitors for misappropriation of assets or income that concern poor communication between practitioners and their clients. Practitioners may be found guilty for not following the standard of conduct.Organizational theoriesA financial crime often takes place in form of an organized crime. According to Petter Gottschalk (2010), criminal organization acts as a monopolistic firm, and the theory of monopoly is used to estimate organized crimes. In organized crime, Shvarts (2001) suggests that rational choice theory can explain the rise of the Russian Mafia that is because of low income and financial difficulties allied with an exploiting jurisprudence forc e, they had any choice to have recourse to crime to afford their standard of living. Rational choice theory states that people commit crimes after acknowledging the punishment for the crimes, as well as the rewards of completing these acts successfully. Examples of this theory include the bank teller who is experiencing personal financial difficulty and decides to loot funds from the bank in order to increase his standard of living (Lyman and Potter, 2007).Gross (1978) argued in his classical article on the theory of organizational crime that studies of crime, and delinquency have a soaked theoretical base. He gave two important theoretical relationships. Firstly, the internal structure and setting of organizations is that in order for the goals to be acheived , the organization will be agonistic to violate the rules and regulation set in the business. Secondly, the perpetrators will associate with the upward mobility of the organization and likely willing and able to commit crime for the business to lay down its goals and to prosper.Bruinsma and Bernasco (2004) used social profits theory to explain the differences in social organization between criminal groups that is criminal organization have a network structure which is related to the legal and financial risks associated with the crimesManagerial theoriesAccording to Eisenhardt (1985), dominance theory is involved with agreeing two problems that can occur in situation relationships. Firstly, the agency problem arises when the desires or goals of the principal and agent disaccord and it is fuzzy and costly for the principal to verify what the agent is doing. Secondly, is the problem of risk sharing that take place when the principal and agent have different risk preferences, goals and do not share profits which occur due to accessibility of new technology. Garoupa (2007) adapted agency theory to criminal organizations. He categorized the criminal firm as a family business with one principal and severa l agents. Alliance theory is touch with partnership,often happens in criminal organizations, it reduce the risk of incompetent legal provision. Trust is an important factor in partnerships. Criminal organizations are often based on trust between its members.Governmental TheoriesAdverse government structures can also be a motivating factor to financial crime. An increased in economic activities together with a weak system in a country including weak government capacity and weak democracy, poor remuneration of public servants, overlook of transparency in government institutions and weak rule of law has increased the opportunities for people to have recourse to economic and financial crime .