Investment-Related Crimes  Insider trading: the use of material, non- public, financial information to obtain an unfair advantage in trading securities.  Stock manipulation: making misleading or even false statements to clients to give the impression that the price of the stock is about to rise and thus to create an artificial demand for it. ©2012 McGraw-Hill Ryerson Ltd.LO2

Bankruptcy Fraud  When a bankruptcy petition is filed, the person or corporation’s property and financial obligations are disposed of.  Bankruptcy fraud: any scam designed to take advantage of loopholes in the bankruptcy laws. ©2012 McGraw-Hill Ryerson Ltd.LO2

Fraud Against the Government  Governments are victims of a vast amount of fraud.  Examples include: collusion in bidding collusion in bidding payoffs and kickbacks to government officials payoffs and kickbacks to government officials expenditures by a government officials that exceed the budget expenditures by a government officials that exceed the budget the filing of false claims the filing of false claims the hiring of friends the hiring of friends offers of inducements to government officials offers of inducements to government officials ©2012 McGraw-Hill Ryerson Ltd.LO2

Consumer Fraud  Home improvement fraud  Deceptive advertising  Telemarketing fraud  Land fraud  Business opportunity fraud ©2012 McGraw-Hill Ryerson Ltd.LO2

Other Types of Fraud  Insurance Fraud: most often accomplished by the filing of false claims for life, fire, marine or casualty insurance.  Tax Fraud: an attempt to evade or defeat a tax, non-payment of a tax, or willful filing of a fraudulent tax return.  Bribery, Corruption, Political Fraud: the objective of such offences vary – favours, special privileges, services, business. ©2012 McGraw-Hill Ryerson Ltd.LO2

Corporate Crime  Crimes committed by one or more employees of a corporation with the aim of furthering the interests of the corporation.  Corporate crime causes more deaths in a month than all of the mass murders do in a decade.  Includes illegal and unsafe working conditions  Corporate crimes are prohibited by a variety of municipal, provincial and federal laws.  Enforcement up to government inspectors. ©2012 McGraw-Hill Ryerson Ltd.LO2

The Costs of Corporate Crime  Costs to Consumers Price-fixing Price-fixing Unsafe products (e.g. Ford Pinto case) Unsafe products (e.g. Ford Pinto case)  Costs to Employees Illegal and/or unsafe working conditions Illegal and/or unsafe working conditions  Costs to Environment Immediate and long-lasting Immediate and long-lasting ©2012 McGraw-Hill Ryerson Ltd.LO2

Legislation in Canada  Environmental regulatory framework overlaps all three levels of government.  Federal efforts: Canadian Environmental Protection Act (CEPA): regulates toxic substances, the import of substances, and hazardous waste. Canadian Environmental Protection Act (CEPA): regulates toxic substances, the import of substances, and hazardous waste. Canadian Environmental Assessment Act: applies to federal and private projects that involve federal government funds or lands. Canadian Environmental Assessment Act: applies to federal and private projects that involve federal government funds or lands. Canadian Criminal Code: allows for the prosecution of organizations for ‘egregious environmental violations.’ Canadian Criminal Code: allows for the prosecution of organizations for ‘egregious environmental violations.’ ©2012 McGraw-Hill Ryerson Ltd.LO2

 Criminal enforcement Although rarely used, maximum fine is $10 million per day that the offence continues; imprisonment is also possible Although rarely used, maximum fine is $10 million per day that the offence continues; imprisonment is also possible  Environmental penalties (EPs) Purpose is to encourage compliance, much like fines Purpose is to encourage compliance, much like fines  Administrative orders Government orders to take remedial actions Government orders to take remedial actions  Civil actions Compensation to make up for damages caused Compensation to make up for damages caused ©2012 McGraw-Hill Ryerson Ltd. Legislation in Canada (cont’d) LO2

Explaining Corporate Crime  Corporate Culture Deviant and criminal behaviours may be encouraged (directly or indirectly) Deviant and criminal behaviours may be encouraged (directly or indirectly) Norms promoting ‘win at all costs’ Norms promoting ‘win at all costs’  Organizational Structure Diffusion of responsibility due to pyramid structure Diffusion of responsibility due to pyramid structure  Capitalism Tends to promote greed, selfishness and crime Tends to promote greed, selfishness and crime Competitive Competitive ©2012 McGraw-Hill Ryerson Ltd.LO2