Of the various types of fraud cases that we see forex criminal practice, foreign exchange fraud stands out as the type of case in which the. International Currency for FOREX Trading — Photo Courtesy of Epsos. The investor is lured in by the fact that the FOREX market is the most liquid market in the world, and the use of leverage in the market can theoretically wildly enhance profit margins with respect to account size. Sometimes the fraud is simple enough that the money is never sent to an Forex. It is simply spent and reported back to the investor as lost in the volatile market. A trader then gets involved in the picture. He facilitates trades through a bank often a foreign bank to purchase commodity pairs. For example, if the investor is convinced to trade the dollar versus the peso, the trader buys that pair. In the typical trade, when a trader buys a pair of dollar versus the peso, he is buying the dollar and selling with the peso,or vice versa. In the foreign exchange market, there is no chance of a rising market. In every trade, there is a winner and frauds loser, that is why it is zero-sum. It is actually less than zero-sum when you account for the commissions of the traders, which are often substantial and, in many fraud schemes, hidden from the investors. Often con-men promise victim investors wild returns and claim to be able to minimize the risk of the market because of sophisticated trading techniques and abilities to stop or cap losses at a certain level. However, because of the volatility and liquidity of the market, these purported forex techniques are usually not actually possible to have in place. Compounding the risk, individual retail traders are by definition under-capitalized such that even if it were a level playing field between an investor and a multinational bank, when two traders continue trading until one trader goes bankrupt, the investor with less capital has a higher probability of going bankrupt first. Also, even though extreme leverage makes FOREX trading very risky, regulation of the industry is limited. That is another part of the reason the industry is ripe with fraud. None of these U. Real estate fraud comes in various forms. Sometimes the investors are attempting to invest in an equity position in the purchase and construction of real estate projects and the loss of their funds becomes a criminal case when the principals in the company make material misrepresentations to the investors and then frauds the money on yachts and trips to Europe instead of on the project sold to the investors. In either scenario, however, a rising real estate bubble can protect both the victims and the perpetrators. In a rising real estate market, if nobody loses money, criminal misrepresentations are less likely to be uncovered and prosecuted. There are likewise a variety of frauds of stock market fraud. Some cases involve misrepresentations by corporate officers of assets and liabilities, even of large companies on the major exchanges, such as Enron. Although the regulators of the exchanges are often asleep at the switch as was the SEC in the Bernie Madoff casethere is even more stock fraud in the pump and dump cases of Penny Stocks, which are not traded on the major exchanges. There is also widespread insider trading, a good example of which is the Galleon Group Hedge Fund case. Its president, Raj Rajaratnam, was already a billionaire, but the United States Attorney for the Southern District of New Frauds proved that to increase his wealth and that of his investorshe was paying a network of insiders to trade on companies including Google, Goldman Sachs, and Hilton Hotels. There have been about 50 other convictions of insider trading in that case alone, and some observers feel that it is representative of just the frauds of the iceberg in the lightly regulated hedge fund field. Federal law enforcement typically works up FOREX cases. They can originate in a CFTC complaint and wind up on the desk of the FBI. Depending on the amount of loss involved, the FBI may take the case to either state or federal prosecutors. Federally, these cases are usually charged as wire and mail fraud. On the state side, we have seen these cases prosecuted in a very straightforward way as grand theft cases. The crimes of larceny, embezzlement, larceny by trick and device, and obtaining property by false pretenses are all varieties of grand theft. They may contend — somewhat indignantly — that a variety of carefully-crafted out-of-state corporations forex them from any personal civil liability, and certainly any criminal individual liability. However, officers, directors and managers of corporations are criminally liable for the crimes they personally commit, authorize, or ratify on behalf of the business entity. Evidence of misrepresentations, combined with sometimes devastating losses to victims, can make taking these cases to trial a risky proposition for the defense. Not nearly so risky of a proposition, however, as getting involved in the FOREX market as an individual retail investor. Even when sophisticated equity traders engage in these trades, they realize that they are not truly investing, they are speculating. There is no chance for the average investor to make money in these transactions, forex as they do with such an information disadvantage to banks, major corporations and hedge funds that make up the vast majority of the players in the market, and especially after the various commissions are subtracted by unscrupulous brokers from any winning transactions. Cartels to Congress Eavesdropping Home Attorneys Robert L. Grimes Contact Articles Peregrine Trial Links White Collar. A Zero-Sum Game By: The FOREX Market Of the various types of fraud cases that we see in criminal practice, foreign exchange fraud stands out as the type of case in which the International Currency for FOREX Trading — Photo Courtesy of Epsos.
What is often classified as American Football for this essay will be called football.
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SCHAFER, ROLLIE RANDOLPH, JR., Professor of Biological Sciences.
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