Fraud in the Markets: Why It Happens and How to Fight It
Fraud In the Markets reveals the critical role fraud played in the global financial crisis-even as many of the perpetrators continue to go unpunished. Shedding light on the reckless conduct of the former senior executives at major Wall Street firms such as Lehman Brothers, Bear Stearns, Merrill Lynch and others just before their collapse, this timely book shows how the culture of "anything goes" on Wall Street fueled the innovation of exotic but deadly asset-backed securities.
A frank insider look at the most dramatic economic and business headlines in recent memory, you will find revealing discussion of
- The egregiously fraudulent lending practices that engulfed the entire US mortgage industry
- The brazenly deceptive marketing of asset-backed securities
- A road map to prevent similar disasters from recurring
Fraud in the Markets offers forward-looking advice, with practical guidelines for protecting yourself and your company from various forms of fraud that were found to have played a role in the current economic and financial crisis.
Introduction: A Brief History of Fraud in Financial Markets.
Banking Fraud in the Early Days.
Market-Building by Morgan.
Flim Flam Finance.
Savings and Loan Fraud Follies.
Beginning of the End.
Off to the Races.
Chapter 1 The Fraud Culture.
I Wanna Be Rich.
The Spread of Ethical Erosion.
What It All Means.
How We Got Here.
The Evolving Shapes of Fraud: Pressure, Opportunity, and Rationalization on Wall Street.
An Triangle or a Diamond?
A Fraud Pentagon?
Chapter 2 The Politics of Banking Fraud.
Politics and Regulation.
Early Due Diligence.
Central Banking: The Drive Is Revived.
Enter the ABA.
The Warburg Factor.
Financial Regulation Today.
Is Regulation Here to Stay?
Chapter 3 Modern Day Financial Services Fraud (1980-2010).
The Fraud Culture and Today's Frauds.
The “Milken/Boesky” Era.
Fancy Financing Foments More Fraud.
The Ignominious Birth of “Pay for Performance”.
A Deluge of Derivatives.
The Good Side of CDSs.
Enron et al.
Chapter 4 Reform, Re-Regulation, and the Persistence of Fraud.
Better Anti-Fraud Controls.
Beyond Financial Reporting Fraud.
Regulation and Legislation.
More Aggressive Action Needed.
Chapter 5 The Real Estate Bubble and Bust: The Fraud Factor.
How Did It Get So Bad?
Subprime Mortgages: Licenses to Steal.
Who Is Subprime?
Going for Broke(r).
Chapter 6 The Makings of a Meltdown.
Other Fraud-for-Profit Schemes.
Greed Grows and Fraud Follows.
Fraud for Property Schemes.
The Role (or Not) of Predatory Lending.
Chapter 7 Beginning of the End: Death by Derivatives.
Playing with Fire.
Chaos Out of Order.
Anatomy of a Subprime Deal.
The Fine Art of Corporate Deception.
Bankers Go with the Flow—Into the Tank.
And Then There's AIG.
How “Toxic” Securities Ended Up in So Many Investor Portfolios.
Rating Agency Deception Redux.
And So, The End Begins.
Chapter 8 Can the Circle be Broken?
So What Now?
Critical Reform Issues.
Policing, Policy, and Propriety.
About the Author.
Fraud and corruption have always been components of American culture. However, as statistics and the personal experiences of many Americans confirm, fraud, corruption, and ethical misconduct was not as prevalent in the 1970s and early 1980s as it is now. From the fraud-driven destruction of a $100 billion company like Enron and the theft of $65 billion through a one-man Ponzi scheme, to the demise of a Wall Street icon like Bear Stearns at the hands of two rogue hedge fund managers, these earth-shattering incidents were practically unheard of until the late 1980s. Now John Wiley & Sons is releasing FRAUD IN THE MARKETS: Why It Happens and How to Fight It (John Wiley & Sons; $39.95; March 2010), a dramatic look at fraud's role in the financial markets, and how readers can protect themselves. The book looks back at the late 1970s and early 1980s as the early stages of what would become the perfect storm of the 2000s. It was the period of unmitigated financial abuse by a contingent of moral misfits who abused deregulation of the S&L industry to steal $150 billion of depositor and investor funds. A period of corporate raiding, dismantling, dissolving, and divesting. Not illegal or particularly unethical, but fuel for the demise of Wall Street decorum and the ascent of personal avarice that some would say culminated in the financial crisis of 2007–2008.
Written from an insider’s perspective, this new book reveals the critical role fraud played in the global financial crisis. Shedding light on the reckless conduct of the former senior executives at major Wall Street firms such as Lehman Brothers, Bear Stearns, Merrill Lynch and others just before their collapse, FRAUD IN THE MARKETS shows how the culture of "anything goes" on Wall Street fueled the innovation of exotic but deadly asset-backed securities. Looking back at the most dramatic economic and business headlines in recent memory, readers will find revealing discussion of:
- The fraudulent lending practices that engulfed the US mortgage industry
- The deceptive marketing of asset-backed securities
- The fraud culture and the untold secrets of flagrant lawlessness in the executive suites of major financial institutions
- Reform, re-regulation, and the persistence of fraud
- The real estate bubble and bust
- The makings of a meltdown
- A road map to prevent similar disasters from recurring
John Bogle, the revered founder and long-time CEO of the Vanguard Group of Mutual Funds, explains the shift this way: “Unchecked market forces overwhelmed traditional standards of professional conduct, developed over centuries. We’ve moved from a society in which ‘there are some things that one simply does not do’ to one in which ‘if every- one else is doing it, I can too.’ Business ethics and professional standards were lost in the shuffle.” FRAUD IN THE MARKETS offers forward-looking advice, with practical guidelines for protecting readers from various forms of fraud that were found to have played a role in the current economic and financial crisis.
ABOUT THE AUTHOR:
Peter D. Goldmann (Ridgefield, CT), is founder and President of White-Collar Crime 101 LLC, the parent company of FraudAware and publisher of the monthly newsletter, White-Collar Crime Fighter. Peter has been the Publisher and Editor of White-Collar Crime Fighter for over 12 years and is recognized as a leading expert in the areas of fraud detection, prevention, investigation and training. He has written numerous articles on practical approaches to fraud prevention and detection for, among others, Internal Auditor, Investor's Business Daily, The Fraud Examiner and Bottom Line/Personal. He speaks at events sponsored by the Association of Certified Fraud Examiners, The International Association of Financial Crime Investigators, National White-Collar Crime Center and numerous industry trade associations. He also is a member of the Editorial Advisory Board of the Association of Certified Fraud Examiners.
FRAUD IN THE MARKETS
Why It Happens and How to Fight It
Published by John Wiley & Sons, Inc.
Publication date: March 2010
$39.95; Hardcover; 272 pages; ISBN: 978-0-470-50789-6
For the convenience of your readers, please include the following in your review:
Wiley books are available at your local bookstore or by calling 1-800-225-5945.
In Canada, call 1-800-567-4797.
Fraud in the Markets: Why It Happens and How to Fight It (US $39.95)
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