Financial crime more than every other crime combined?

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Re: Financial crime more than every other crime combined

Postby admin » Thu Aug 06, 2009 7:46 pm

a cool look at how the police are outgunned in matters of financial crime
Source: Police Administration Survey, Canadian Centre for Justice Statistics, Statistics Canada.
For more information, see Police Personnel and Expenditures in Canada - (catalogue 85F0019XPE)
Policing expenditures totalled $5.99 billion in 1997, up 2.3% from 1996. Even after
adjusting for inflation, policing expenditures increased 0.6%.


that is for ALL OF CANADA

compare this to Nortel, where certain executives cooked the books to pay themselves bonus's in excess of $120 million, then let the company fail in a $366 Billion evaporation of stock market value

wow! $366 bil in damages vs $6 bil in police spending.

It is like trying to catch crooks driving Lear Jets, by police who are driving a 1958 VW Beetle with 58 horsepower.
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Re: Financial crime more than every other crime combined

Postby admin » Thu Aug 06, 2009 7:42 pm

I have not done the math just yet, so bear with me on this imaginative topic:

Imagine calculating the number of crimes in Canada (stats Canada and Justice Canada), and dividing that number into the dollar value of those crimes (also easily available). I think it comes out to somewhere less than $5000 per crime for the million (s) crime numbers.

Then try and do something similar with financial crimes. Again, I have not yet put together a credible set of numbers, but I am willing to guess that we can come up with a number that suggests that thousands, or tens of thousands of cunning white collar fraudsters do more damage to our economy, than the more than million criminals convicted in Canada each and every year.

Again, I will patiently wait for Prof P Puri's upcoming study of the damage from white collar crime. U of T Rotman School of Business. It will be far better than my musings.

Source: Uniform Crime Reporting Survey, Canadian Centre for Justice Statistics, Statistics Canada, 1998.
For more information, see Juristat (catalogue no.85-002) Vol.19, No. 9, “Crime Statistics in Canada, 1998.”
• In 1998, there were approximately 1.38 million property crime incidents corresponding to
a rate of 4,541 per 100,000 population.
• Theft of $5,000 and under accounted for over half (52%) of all property crimes, while
break and enter represented one-quarter (25%). The remaining categories were motor
vehicle theft (12%), fraud (7%), possession of stolen goods (2%) and theft over $5,000
(2%).
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Re: Financial crime more than every other crime combined

Postby admin » Thu Aug 06, 2009 7:37 pm

Back of napkin look at cost to Canadians, with some source material shown for estimates.

Bad new issues, faulty income trusts, junk securities sold to the public = $20 billion each year (see detailed posting to follow)

Highest Mutual Fund costs in the world = $25 billion each year Keith Ambaschteer U of Toronto

Multiple don-nothing regulators = $10 billion each year Prof John Coffee, Columbia University

Sales practices that maximize commissions to customers/rev to broker =1 bil each year $20 bil per year in funds sales, @5% DSC

Double dipping (fees on top of commissions or vice versa) =$1 bil (ultra conservative estimate based on personal experience from 20 years inside industry)

Fee based account abuse (adding unnecessary fees to clients accounts) = $5 bil (estimate based on personal experience inside industry) (see FINRA web site in USA for better description and warnings of this abuse)

Churning for maximum commissions =$ 5 bil (estimate based on personal experience) Note that the FSA in Britain has now banned the use of commission as a form of compensation by those who call themselves financial advisors) They are setting the example by leading and we continue to "bleed" our clients to financial health here in Canada.

Totals = $67 bil

$67 bil from memory.......by a guy with an admitted bad memory. $35 Bil of this from credible and objective University studies. Compare this to the $40ish bil estimates by Justice Canada for all the "other" crimes in Canada combined.
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Re: Financial crime more than every other crime combined

Postby admin » Thu Aug 06, 2009 7:29 pm

Bad new issues, faulty income trusts, junk securities sold to the public = $20 billion each year

Highest Mutual Fund costs in the world = $25 billion each year

Multiple don-nothing regulators = $10 billion each year

Sales practices that maximize commissions to customers/rev to broker =1 bil each year

Double dipping (fees on top of commissions or vice versa) =$1 bil

Fee based account abuse (adding unnecessary fees to clients accounts) = $5 bil

Churning for maximum commissions =$ 5 bil

Totals = $67 bil

(for ease of readability, I will paste on a following post some of the source material for these numbers)
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Financial crime more than every other crime combined?

Postby admin » Wed Aug 05, 2009 11:41 am

Stock Factoid: In 2000 , Nortel was worth $366-billion on the Toronto Stock
Exchange, making it by far the country's most valuable company. It was a global
phenomenon. Nortel employed 95,000, ran R&D labs around the globe and promoted an
international brand that reminded everyone Canada was a high-tech powerhouse. In June,
2009 it was delisted from the TSX and will be sold off in pieces.


I will use this forum to compile a list of known damages due to financial fraud, financial abuse, etc BY so called trusted professionals, so that it can be compared to the dollar cost of each and every other crime in Canada combined.

Justice Canada web site puts the total dollar cost of crime in Canada at $40 billion each and every year. Lets start adding up the financial costs of bad professional behavior:

1. Nortel $366 billion lost while top executives stole as much as $120million (one guy's take) in phoney bonus schemes.
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