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Money managers under the microscope

Fraud – a booming business

May 21, 2009

Fraud is booming as financial pressures rise during the recession, according to PricewaterhouseCoopers, which last night hosted a meeting of its ‘Fraud Academy’, which aims to help companies share tips on spotting those up to no good.

rtr232sh“I think fraud is booming in the current downturn,” said Andrew Gordon, a partner in the forensic accounting practice.

“I think more frauds are going to be disclosed as we roll forward. During the last recession there were a number of companies teetering on the brink and I think there will be more insolvencies containing fraud.”

Only last week Reuters revealed that the Serious Fraud Office had arrested two men in connection with its probe into collapsed hedge fund Weavering.

And learning from the United States, where hedge-fund fraud has been more common, the agency is stepping up its vigilance on hedge funds by developing a system of ‘red flags’ to help it spot hedge fund fraud.

While UK-based managers, for instance, are well regulated, the funds are less closely supervised, and structures such as gates and suspensions could in theory help keep a fraud hidden for some time.

There may not be another one on the scale of Madoff for a while, but, if PwC are right, fraud is likely to be in the news for some time yet.

Comments

Focused not to fall victim to the petty thieves who were after our wallets, we developed a blindspot for the big fish that stole our savings, pensions and investments.

 

We’re only focusing on the obvious end users of the cycle of fraud. The fraud of blatantly (or ignorantly if the “experts” were actually only well paid morons) creating bubble after bubble to whittle away wealth at each step is still out there.

Remember the reference to the Dutch tulip bulb crisis when discussing the dot com days? The fraud continued, though, and the same mouthpieces calling anybody who disagreed stupid still have jobs as “expert commentators” and “financial analysts”. Never mind that they’ve gonve from talking up that bubble on stocks that were by and large very well funded hobbies of technos who had no clue that hosting free services and giving away free products isn’t a sound business plan. The drum beates stopped talking about dividends all together and kept a straight face while quoting obscen P/E ratios, while hding the facts that earnings of $100 mean nothing if you have bills of a million.

Then toss in the real estate bubble, the oil bubble, the gold bubble…just nothing more than giving the gambler who’s broke but found a fiver in theparking lot the chance to throw even that away.

“Investors” who lost out ot a pyramid scheme are thre reason there’s the old line, “you can’t con an honest man”. The fact that they thought their superior status and inside connections would get them money for nothing is the exact kind of dishonest greed that makes a person a victim to scam.

The “poor woman” in court in NYC crying she had millions as was now on food stamps probably never thought once in her life of the people she damaged when those tactics worked in her favor and she profited at others’ expense.

Sadly, the only way to achieve true justice would be for the dollar to become so worthless, the thieves are finally as broke as the nation of victims they show no sympathy for.

Posted by Brian Foulkrod | Report as abusive
 

Deregulation of the banking and financial sevices industries in the US has led to this crisis.
Unmitigated greed also played a big role.
We are witnessing the collapse of the Reagan economic revolution which was perpetuated and reinforced by every president since then.

Posted by Jerry | Report as abusive
 

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