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Securities and Commodities Fraud
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Securities and Commodities Fraud
Apart from corporate fraud noted above, which primarily involves falsifying corporate information and using inside information to self-deal, a host of other crimes involve duping would-be investors and consumers by misrepresenting the information they use to make decisions.
The perpetrator of the fraud can be an individual, such as a stockbroker, or an organization, such as a brokerage firm, corporation, or investment bank. Independent individuals might also commit this type of fraud through schemes such as insider trading. Some famous examples of securities fraud are the Enron, Tyco, Adelphia and WorldCom scandals.
Investment fraud
High-yield investment fraud typically involves promises of high rates of return while claiming there is little to no risk. The investments themselves may be in commodities, securities, real estate, and other categories.
Ponzi and pyramid schemes typically draw upon the funds furnished by new investors to pay the returns that were promised to prior investors caught up in the arrangement. Such schemes require the fraudsters to continuously recruit more and more victims to maintain the sham for as long as possible. The schemes typically fail when demands from existing investors outstrip new funds flowing in from new recruits.
Advance fee schemes can follow a more subtle strategy, where the fraudster convinces their targets to advance them small amounts of money that is promised to result in greater returns.
Other related frauds
Other investment scams flagged by the FBI include promissory note fraud, in which generally short-term debt instruments are issued by little-known or nonexistent companies, promising a high rate of return with little or no risk. Commodities fraud is the illegal sale or purported sale of raw materials or semi-finished goods that are relatively uniform in nature and are sold on an exchange, including gold, pork bellies, and coffee. Often in these frauds, the perpetrators create artificial account statements that reflect purported investments when, in reality, no such investments have been made. Broker embezzlement schemes involve illicit and unauthorized actions by brokers to steal directly from their clients, usually with a slew of false documents.
More elaborate yet are market manipulations, so-called “pump and dump” schemes that are based on artificially inflating the price of lower-volume stocks on small over-the-counter markets. The “pump” involves recruiting unwitting investors through false or deceptive sales practices, public information, or corporate filings. The FBI says that brokers—who are bribed by the conspirators—then use high pressure sales tactics to increase the number of investors and, as a result, raise the price of the stock. Once the target price is achieved, the perpetrators “dump” their shares at a huge profit and leave innocent investors to foot the bill.
Detection and Deterrence
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Allegations of securities fraud are investigated by the Securities and Exchange Commission (SEC) and National Association of Securities Dealers (NASD), often in concert with the FBI.
State authorities can also investigate investment scams. In a unique attempt to protect its citizens, for example, the state of Utah established the nation’s first online registry for white-collar criminals in 2016. Photos of individuals who are convicted of a fraud-related felony rated as second-degree or higher are featured on the registry. The state initiated the registry because Ponzi-scheme perpetrators tend to target tight-knit cultural or religious groups, such as the Church of Jesus Christ of Latter-day Saints community that's based in Salt Lake City, Utah.
https: //www. investopedia. com/terms/a/aml. asp
Anti Money Laundering (AML)
REVIEWED BY WILL KENTON
What Is Anti Money Laundering?
Anti-money laundering refers to a set of laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income. Though anti-money-laundering (AML) laws cover a relatively limited range of transactions and criminal behaviors, their implications are far-reaching. For example, AML regulations require that banks and other financial institutions that issue credit or allow customers to open deposit accounts follow rules to ensure they are not aiding in money-laundering.
AML compliance officers are often appointed to oversee anti-money laundering policies and ensure that banks and other financial institutions are compliant.
What's Anti-Money Laundering?
How Anti Money Laundering (AML) Works
Anti-money-laundering laws and regulations target criminal activities including market manipulation, trade in illegal goods, corruption of public funds, and tax evasion, as well as the methods that are used to conceal these crimes and the money derived from them.
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