Emerald | Journal of Financial Crime | Table of Contents http://www.emeraldinsight.com/1359-0790.htm Table of contents from the most recently published issue of Journal of Financial Crime Journal en-gb Fri, 20 Dec 2013 00:00:00 +0000 2013 Emerald Group Publishing Limited editorial@emeraldinsight.com support@emeraldinsight.com 60 Emerald | Journal of Financial Crime | Table of Contents http://www.emeraldinsight.com/common_assets/img/covers_journal/jfccover.gif http://www.emeraldinsight.com/1359-0790.htm 120 157 The FSA, “credible deterrence”, and criminal enforcement – a “haphazard pursuit”? http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102643&show=abstract http://www.emeraldinsight.com/10.1108/JFC-02-2013-0007 <strong>Abstract</strong><br /><br /><B>Purpose</B> – Located within growing scholarly interest in linking the global financial crisis with revelations of financial crime, this piece utilises Roman Tomasic's suggestion that the financial crisis has marked something of a turning point in regulatory responses to financial crime worldwide. Tomasic attributes this to changing attitudes towards light-touch regulation and risk assessment, and the demand for existing agencies to be replaced with new tougher authorities. In the UK, this can be illustrated by the imminent replacement of the FSA with the Financial Conduct Authority (FCA). The paper aims to discuss these issues. <B>Design/methodology/approach</B> – Discussion of the FSA's financial crime fighting activity is an important forecast for the likely directional focus of the FCA in this regard. A focus only on “market abuse” enforcement within this arises on account of the effects for financial systems widely attributed to this activity, with threats to systemic stability being a hallmark of the 2007-2008 financial crisis. This methodology also encourages coherence in focus and management of sources within the article. Market abuse enforcement provides a lens for exploring the FSA's adoption of the philosophy and ethos of “credible deterrence”, and FCA commitment to retain it, and ultimately for applying the hypothesis of the “haphazard pursuit of financial crime” to pre-crisis criminal enforcement relating to financial crime undertaken by the FSA. <B>Findings</B> – The FSA and FCA appear acutely aware that the financial crisis has marked something of a turning point for the enforcement of financial crime, and for signalling changes in approach, for the reasons explored by Tomasic. Tomasic correctly identifies factors encouraging a range of undesirable practices pre-crisis, and ones signalling tougher and more sustained attention being paid to financial crime henceforth. It is noted that, pre-crisis, the FSA's pursuit of criminal enforcement of market abuse was conscious, comprehensively resourced, well publicised, and actually extensive. <B>Originality/value</B> – This exploration of the FSA's criminal enforcement of market abuse given the Authority's own perceptions that it was not, and could never be, a “mainstream” criminal prosecutor considers the likely lasting legacy of this determined pursuit, when domestic politics and pan-European policies suggested against this. This is likely to be enormously valuable as the FCA undertakes this task in a domestic arena which is markedly in contrast from this, and where European agendas are pushing in favour of criminal enforcement, with the “more Europe, or less” debate providing a further dimension of interest. Article literatinetwork@emeraldinsight.com (Gary Wilson, Sarah Wilson) Fri, 20 Dec 2013 00:00:00 +0000 “Gossip boys”: insider trading and regulatory ambiguity http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102644&show=abstract http://www.emeraldinsight.com/10.1108/JFC-04-2013-0030 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The purpose of this viewpoint, case study analysis paper is to assist in understanding how history repeats itself in the case of insider trading, even with regulatory intervention. <B>Design/methodology/approach</B> – Qualitative methodology approach, using interviews of some of the watchdogs of Wall Street (SEC, US Attorney's Office) during the insider trading scandals of the 1980s. Key themes including ambiguity of money, regulation, and the networks of financial institution professionals are discussed. <B>Findings</B> – Findings suggest that regulation is difficult if nearly impossible, in the face of limited resources and regulatory ambiguity. <B>Practical implications</B> – This paper suggests a network approach to regulators, corporate decision makers, and academics in order to understand the structure of insider trading conspiracies. <B>Originality/value</B> – Continues the tradition of qualitative research in a niche of white-collar crime that is more often approached with strict statistic analysis. Value is that the data are allowed to “speak for themselves” and patterns of structure are allowed to emerge without prior biases of hypotheses. Article literatinetwork@emeraldinsight.com (Laura L. Hansen) Fri, 20 Dec 2013 00:00:00 +0000 Perception of political corruption as a function of legislation http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102645&show=abstract http://www.emeraldinsight.com/10.1108/JFC-04-2013-0025 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The main aim of the paper is to determine whether countries with enacted legislation on electoral accountability issues (such as conflict of interest, revolving doors, asset disclosure, lobbying, immunity, political party funding and a code of conduct for politicians) have lower corruption perception than countries that do not have legislation on those variables. <B>Design/methodology/approach</B> – The author utilised the corruption reports developed by the corruption country experts appointed by the EU DG Home and carried a correlation analysis between the above variables and the Corruption Perception Index (CPI) developed by Transparency International. <B>Findings</B> – A correlation was only found for the asset disclosure variable and CPI. Alternative factors borne out of the literature are briefly discussed and suggestions for future research are made. <B>Research limitations/implications</B> – Due to the small sample size (<IT>n</IT>=26), the statistical analysis that could be carried out was limited. <B>Practical implications</B> – One policy implication of the negative finding obtained is that politicians are well advised to invest in measures that will enhance the electorate's trust in them. Passing anti-corruption legislation alone does not yield low corruption perception. <B>Originality/value</B> – This is the first study of its kind addressing corruption correlates by looking at electorate accountability. Article literatinetwork@emeraldinsight.com (Maria Krambia-Kapardis) Fri, 20 Dec 2013 00:00:00 +0000 Financial crime prosecution, legal certainty and exigency of policy: case of Nigeria's EFCC http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102646&show=abstract http://www.emeraldinsight.com/10.1108/JFC-06-2013-0044 <strong>Abstract</strong><br /><br /><B>Purpose</B> – In its fight against money laundering involving politically exposed persons (PEPs), the Economic and Financial Crimes Commission (EFCC) has the dual mandate of maintaining equilibrium between two fundamental, but sharply contradictory objectives: establishing guilt beyond a reasonable doubt, and responding to the policy imperative of nipping corruption in the bud through a pro-active involvement in preventative measures. This paper contends that as a result of the tension between these two divergent ends, the agency has found itself the spider in a cobweb of legalism designed by its adversaries to stymie its operations. Furthermore, and as a matter of priority, the paper calls for a major rethink of the appropriateness of criminal jurisdiction in the prosecution of financial crimes in Nigeria and elsewhere in Africa. The paper aims to discuss these issues. <B>Design/methodology/approach</B> – Case study and textual analysis of literature. <B>Findings</B> – Civil jurisdiction of extracting the proceeds of the criminal activities of PEPs provides a better mode of deterrence than any criminal sanction could hope to achieve. <B>Originality/value</B> – Creative in deciphering a major root cause of the ineffectiveness of criminal sanction as an anti-corruption weapon. Article literatinetwork@emeraldinsight.com (Tayo Oke) Fri, 20 Dec 2013 00:00:00 +0000 SMEs and the business reality of criminality (the case of Estonia) http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102647&show=abstract http://www.emeraldinsight.com/10.1108/JFC-05-2013-0035 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The aim of the paper is to identify key areas of criminality that affects SMEs and assess and link academic literature on criminality in relation to those areas with the empirical research. In effect to explore the business reality of the criminality environment and its significant aspects that have an impact on SME organisations and their managers and assist their decision making. Additionally, to consider the impact of Estonia's Soviet historical background and her EU membership criminal law obligations within such an evaluation. <B>Design/methodology/approach</B> – This exploratory paper makes use of World, European and domestic surveys and primary criminal and business law sources as well as interviews from a business within the country assessed and a former Estonian police inspector. Together this gives an academic and grass-roots perspective for an assessment of the criminality reality for SMEs. <B>Findings</B> – The investigation reaffirms the importance of SMEs within former economies from a Soviet background such as Estonia. It also emphasises the correlation between economic growth, business regulation and criminality and identifies the significance and “key” aspects of criminality for an SME. Furthermore, that Estonia's criminal law that affects SMEs is generally as it is written and that Estonia has a positive compliance with EU directives and regulations. It emphasises that overall a very positive progression has been made by Estonia within its criminal law environment which is considered stable and encouraging for SME activity. The recording of crime is relatively low by EU standards and has an effect, albeit small, on the reality for SMEs. <B>Practical implications</B> – This research demonstrates the reality of the extent of criminality in Estonia and its positive progression in dealing with it. Corruption, a legacy from the Soviet period, is relatively small within the Estonian system as well as protection costs for an SME. There is, however, an acceptance of the existence of organized crime in Estonia although it is an under researched area. Some of the gaps within the World, European and domestic surveys are filled by the interviews although further evaluation is needed from other academics. <B>Originality/value</B> – The research highlights the importance of the criminal law environment for SMEs within a relatively new EU member state. It provides an original grass-roots perspective on top of an academic assessment providing fuller information on the reality for SME activity. This is helpful for SME's operating or thinking of doing business in Estonia as well as providing indicators for countries from similar Soviet backgrounds as to their criminality reality. Article literatinetwork@emeraldinsight.com (Paul Gordon Dickinson) Fri, 20 Dec 2013 00:00:00 +0000 Detection and prevention of financial abuse against elders http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102648&show=abstract http://www.emeraldinsight.com/10.1108/JFC-05-2013-0040 <strong>Abstract</strong><br /><br /><B>Purpose</B> – This paper reports on banking and finance professionals' decision making in the context of elder financial abuse. The aim was to identify the case features that influence when abuse is identified and when action is taken. <B>Design/methodology/approach</B> – Banking and finance professionals (<IT>n</IT>=70) were shown 35 financial abuse case scenarios and were asked to judge how certain they were that the older person was being abused and the likelihood of taking action. <B>Findings</B> – Three case features significantly influenced certainty of financial abuse: the nature of the financial problem presented, the older person's level of mental capacity and who was in charge of the client's money. In cases where the older person was more confused and forgetful, there was increased suspicion that financial abuse was taking place. Finance professionals were less certain that financial abuse was occurring if the older person was in charge of his or her own finances. <B>Originality/value</B> – The research findings have been used to develop freely available online training resources to promote professionals' decision making capacity (www.elderfinancialabuse.co.uk). The resources have been advocated for use by Building Societies Association as well as CIFAS, the UK's Fraud Prevention Service. Article literatinetwork@emeraldinsight.com (Priscilla A. Harries, Miranda L. Davies, Kenneth J. Gilhooly, Mary L.M. Gilhooly, Deborah Cairns) Fri, 20 Dec 2013 00:00:00 +0000 Earnings management practices in India: a study of auditor's perception http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102649&show=abstract http://www.emeraldinsight.com/10.1108/JFC-09-2013-0054 <strong>Abstract</strong><br /><br /><B>Purpose</B> – Earnings management are euphemisms referring to accounting practices that may follow the letter of the rules of standard accounting practices, but certainly deviate from the spirit of those rules. Companies across the world follow earning management practices in a way so as to show a favourable position to their stakeholders. Satyam scam in India was a similar type of case. The present study has been carried out with the aim of examining the perception of auditors on earnings management in Indian perspective. <B>Design/methodology/approach</B> – A questionnaire was administered on 65 auditors and was analysed using descriptive statistics and factor analysis methods. <B>Findings</B> – The analysis shows that most of the firms indulge into such practices even in the presence of regulatory framework available to keep a check on these practices. The management tries to interpret and modify the law provisions as per their will and do manipulations in the financial results. <B>Practical implications</B> – The research findings would guide regulators and management to curb such malpractices. The auditors, top management and government have to become more aware, socially responsible, have ethical behaviour, become more transparent to protect the interests of stakeholders associated with the organizations. <B>Originality/value</B> – The paper provides an insight into auditor's perception on earnings management during a time when financial scams like Satyam in India have taken place and auditor's integrity is questioned. Article literatinetwork@emeraldinsight.com (Divya Verma Gakhar) Fri, 20 Dec 2013 00:00:00 +0000 Order-based manipulation: evidence from Hong Kong stock market http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102650&show=abstract http://www.emeraldinsight.com/10.1108/JFC-02-2013-0008 <strong>Abstract</strong><br /><br /><B>Purpose</B> – The paper aims to investigate order-based manipulation that consists of order-placing strategies. <B>Design/methodology/approach</B> – Using the bid and ask record provided by Hong Kong Exchanges and Clearing Limited, a Level II dataset, the paper develops a methodology to obtain cancelled orders during regular trading hours. The paper examines the cancelled orders and potential order-based manipulation activities, as well as the corresponding behavior of different groups of stocks. <B>Findings</B> – Empirical results show that the relationship between order cancellation and order-based manipulation is strong and deserves more attention. <B>Originality/value</B> – The methodology can also be used by regulators and authorities to monitor suspicious activities in the market. This paper also suggests that analysis on high-frequency data does improve the understanding of trading activities in the stock market. Article literatinetwork@emeraldinsight.com (Chun-Hin Chan, Alfred Ka Chun Ma) Fri, 20 Dec 2013 00:00:00 +0000 Public responsibility and private action http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102651&show=abstract Editorial literatinetwork@emeraldinsight.com (Li-Hong Xing) Fri, 20 Dec 2013 00:00:00 +0000 2013 Awards for Excellence http://www.emeraldinsight.com/journals.htm?issn=1359-0790&volume=21&issue=1&articleid=17102652&show=abstract 2013 Awards for Excellence Fri, 20 Dec 2013 00:00:00 +0000