The Identification of Ponzi Schemes: Can a Picture Tell a Thousand Frauds?

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Title The Identification of Ponzi Schemes: Can a Picture Tell a Thousand Frauds?
Author Drew, Jacqueline Mary; Drew, Michael Emmanuel
Journal Name Griffith Law Review: Law Theory Society
Year Published 2010
Place of publication Australia
Publisher Socio-Legal Research Centre, Griffith University
Abstract There is voluminous commentary on the origins of the Global Financial Crisis (GFC), international attempts to limit the contagion and the Herculean effort to stop the global economy sliding into a depression. However, in the fast moving world of the GFC, the debate shifted to the search for answers to most challenging question – can we stop this from occurring again? To date, a number of responses have been formulated, including the need for a more holistic approach to regulating the global financial system; more stringent controls on banks and new financial products; and, reform of executive remuneration practices that encourage excessive risk taking. This paper suggests an additional issue in the reform debate warrants consideration. The adequacy and implementation of fraud detection systems in the financial services industry must be addressed. The monthly returns from the largest feeder fund in the US$65billion Ponzi scheme overseen by Bernard L. Madoff are analysed to demonstrate how the performance characteristics of investment schemes can be used as a potential 'red flag' indicator in a broad system of fraud detection. It is argued that performance characteristic analysis is likely to play an important role as one tool within a collection of quantitative and qualitative assessment controls able to identify fraud perpetration in the financial services industry.
Peer Reviewed Yes
Published Yes
Publisher URI http://www.griffith.edu.au/law/griffith-law-review
Copyright Statement Copyright 2010 Griffith Law School. The attached file is reproduced here in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.
Volume 19
Issue Number 1
Page from 51
Page to 70
ISSN 1038-3441
Date Accessioned 2010-08-17
Language en_AU
Research Centre ARC Centre of Excellence in Policing and Security
Faculty Faculty of Humanities and Social Science
Subject Causes and Prevention of Crime; Finance
URI http://hdl.handle.net/10072/34230
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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