The sleeping watch dog: aka the Securities and Exchange Commission
Purpose - The purpose of this paper is to expose inefficient regulatory policies and organizational weaknesses at the Securities and Exchange Commission (SEC) that have contributed to a series of regulatory oversights that have produced some of the largest fraud schemes perpetrated on investors. Design/methodology/approach - Sources of information consisted of scholarly articles and articles retrieved from the web. Findings - Findings suggest that although weaknesses that have been exposed at the SEC may not account for any one securities fraud oversight, cumulatively, the weaknesses create negative synergy that increases the probability that a regulatory oversight will occur. Originality/value - This paper serves as a useful guide to alert and educate securities regulators and enforcement, regardless of the country they may operate in, to examine their own regulatory policies and organizational structures for weakness that may be similar to the SEC.
Commentary from the American Accounting Association's 2011 Annual Meeting Panel on Emerging Issues in Fraud Research
A t one of the forensic and investigative accounting panels at the American Accounting Association’s 2011 Annual meeting, panelists discussed some of the common misconceptions about fraud, the dearth of articles related to fraud examination and forensic accounting published in the mainstream accounting journals, and the many opportunities for future research in these areas. They also discussed the publication process as it relates to articles on fraud examination and forensic accounting topics. This article summarizes their discussion, and also draws upon some of the relevant published literature to highlight some of the fraud topics that are still largely unexplored and thus ripe for academic research. An emerging area of research is in the fraud and forensic accounting area. As a result of increased interest in fraud and forensic topics, journals (both new and old) are interested in manuscripts. The purpose of this paper is to (1) critically evaluate the state of current fraud research and provide guidance for future researchers, and (2) examine the publication process for both practitioner and scholarly journals from both an editorial and topical perspective. For readers who may be unfamiliar with the difference between forensic accounting and fraud examination, forensic accounting is a broader term that involves using accounting for investigative or other legal applications, such as corporate acquisition, divorce proceedings, insurance settlement, or other legal purposes. Joe Wells (2003) defines forensic accounting as work done by accountants
The mathematics of Ponzi schemes
A first order linear differential equation is used to describe the dynamics of an investment fund that promises more than it can deliver, also known as a Ponzi scheme. The model is based on a promised, unrealistic interest rate; on the actual, realized nominal interest rate; on the rate at which new deposits are accumulated and on the withdrawal rate. Conditions on these parameters are given for the fund to be solvent or to collapse. The model is fitted to data available on Charles Ponzi's 1920 eponymous scheme and illustrated with a philanthropic version of the scheme.