Corruption and Fraud in Financial Markets (eBook, PDF)

Malpractice, Misconduct and Manipulation
Redaktion: Alexander, Carol; Cumming, Douglas

• Format: PDF

Produktbeschreibung

Identifying malpractice and misconduct should be top priority for financial risk managers today Corruption and Fraud in Financial Markets identifies potential issues surrounding all types of fraud, misconduct, price/volume manipulation and other forms of malpractice. Chapters cover detection, prevention and regulation of corruption and fraud within different financial markets. Written by experts at the forefront of finance and risk management, this book details the many practices that bring potentially devastating consequences, including insider trading, bribery, false disclosure, frontrunning, options backdating, and improper execution or broker-agency relationships. Informed but corrupt traders manipulate prices in dark pools run by investment banks, using anonymous deals to move prices in their own favour, extracting value from ordinary investors time and time again. Strategies such as wash, ladder and spoofing trades are rife, even on regulated exchanges - and in unregulated cryptocurrency exchanges one can even see these manipulative quotes happening real-time in the limit order book. More generally, financial market misconduct and fraud affects about 15 percent of publicly listed companies each year and the resulting fines can devastate an organisation's budget and initiate a tailspin from which it may never recover. This book gives you a deeper understanding of all these issues to help prevent you and your company from falling victim to unethical practices. * Learn about the different types of corruption and fraud and where they may be hiding in your organisation * Identify improper relationships and conflicts of interest before they become a problem * Understand the regulations surrounding market misconduct, and how they affect your firm * Prevent budget-breaking fines and other potentially catastrophic consequences Since the LIBOR scandal, many major banks have been fined billions of dollars for manipulation of prices, exchange rates and interest rates. Headline cases aside, misconduct and fraud is uncomfortably prevalent in a large number of financial firms; it can exist in a wide variety of forms, with practices in multiple departments, making self-governance complex. Corruption and Fraud in Financial Markets is a comprehensive guide to identifying and stopping potential problems before they reach the level of finable misconduct.

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Produktdetails

• Verlag: For Dummies
• Seitenzahl: 624
• Erscheinungstermin: 7. September 2022
• Englisch
• ISBN-13: 9781394178148
• Artikelnr.: 66253502

Autorenporträt

CAROL ALEXANDER, Ph.D., is Professor of Finance at the University of Sussex, Visiting Professor at Peking University PHBS Business School in Oxford and Co-Editor of the Journal of Banking and Finance. She is the former Chair of the Board of the Professional Risk Manager's International Association and she consults on model design for major exchanges, banks, and fund managers worldwide. She has edited more than a dozen books in finance and risk management and her sole-authored four-volume textbook on Market Risk Analysis (Wiley, 2008) remains the definitive guide to the subject after more than 12 years in print. DOUGLAS CUMMING J.D., Ph.D., CFA, is the DeSantis Distinguished Professor of Finance and Entrepreneurship at the College of Business, Florida Atlantic University, and Visiting Professor of Finance at Birmingham Business School, University of Birmingham, and Royal Melbourne Institute of Technology. He has published 18 books and over 185 articles in leading journals such as the Academy of Management Journal, Journal of Financial Economics, and Review of Financial Studies, which have been cited over 15,000 times. He is the Managing Editor-in-Chief of the British Journal of Management and Journal of Corporate Finance, and the Founding Editor-in-Chief of the Review of Corporate Finance.

Inhaltsangabe

About the Editors xv

List of Contributors xvii

Foreword xix

Acknowledgements xxi

Chapter 1: Introduction 1
Carol Alexander and Douglas Cumming

Part I What are Manipulation and Fraud and Why Do They Matter? 11

Chapter 2: An Overview of Market Manipulation 13
Tlis J. PutniFs

2.1 Introduction 14

2.2 Definitions of Market Manipulation 16

2.2.1 Legal Interpretation and Provisions against Market Manipulation 16

2.2.2 Economics and Legal Studies Perspective 18

2.3 A Taxonomy of the Types of Market Manipulation 19

2.3.1 Categories of Market Manipulation 19

2.3.2 Market Manipulation Techniques 22

2.4 Research on Market Manipulation 26

2.4.1 Theoretical Literature 27

2.4.2 Empirical Literature 30

2.4.3 Conclusions from the Research on Market Manipulation 35

2.5 Summary and Conclusions 39

References 40

Chapter 3: A Taxonomy of Financial Market Misconduct 45
Ai Deng and Priyank Gandhi

3.1 Introduction 46

3.2 Challenges in Research on Financial Market Misconduct 50

3.3 Defining Financial Market Misconduct 51

3.3.1 Price Manipulation 53

3.3.2 Circular Trading 54

3.3.3 Collusion and Information Sharing 55

3.3.4 Inside Information 56

3.3.5 Reference Price Influence 56

3.3.6 Improper Order Handling 57

3.3.7 Misleading Customers 58

3.4 Defining Financial Fraud 59

3.4.1 Credit Card Fraud 59

3.4.2 Money Laundering 60

3.4.3 Financial Statement Fraud 60

3.4.4 Computer Intrusion Fraud 61

3.5 Conclusion 61

References 61

Chapter 4: Financial Misconduct and Market-Based Penalties 65
Chelsea Liu and Alfred Yawson

4.1 Introduction 66

4.2 Notable Cases of Financial Reporting Fraud 69

4.3 Financial Reporting Misconduct and Legal Redress 70

4.4 Evolution of US Financial Regulations 71

4.4.1 Private Securities Litigation Reform Act (1995) 72

4.4.2 Sarbanes-Oxley Act (2002) 72

4.4.3 Dodd-Frank Act (2010) 73

4.5 Legal versus Market-Based Penalties for Financial Misconduct 74

4.5.1 Common Forms of Legal Penalties 74

4.5.2 Role of Market-Based Penalties 75

4.6 Firm-Level Penalties for Corporate Financial Misconduct 75

4.6.1 Direct Economic Costs Captured in Loss of Market Value 83

4.6.2 Loss of Firm Reputation 83

4.6.3 Spillover of Reputational Effect 84

4.6.4 Governance Risk and Insurance Premiums 85

4.6.5 Reduced Liquidity 85

4.6.6 Access to Financing 85

4.6.7 Reduced Innovation 86

4.6.8 Mergers and Acquisitions 86

4.7 Individual-Level Penalties for Corporate Financial Misconduct 87

4.7.1 Executive and Director Turnover 87

4.7.2 Impaired Career Progression 95

4.7.3 Loss of Reputation 96

4.7.4 Executive Compensation 97

4.7.5 Strengthened Monitoring 97

4.8 Causes, Risks, and Moderators of Financial Misconduct 98

4.8.1 Fraud Incentives 98

4.8.2 Risk Factors 113

4.8.3 Public Enforcement: Regulatory and Judicial Stringency 115

4.8.4 Public Enforcement: Detection and Surveillance 116

4.8.5 Private Enforcement 117

4.9 Other Non-Financial Misconduct 118

4.10 Concluding Remarks 119

References 120

Chapter 5: Insider Trading and Market Manipulation 135
Jonathan A. Batten, Igor Lon arski, and Peter G. Szilagyi

5.1