Corruption and Fraud in Financial Markets

About the Editors xv
 
List of Contributors xvii
 
Foreword xix
 
Acknowledgements xxi
 
Chapter 1: Introduction 1
Carol Alexander and Douglas Cumming
 
Part I What are Manipulation and Fraud and Why Do They Matter? 11
 
Chapter 2: An Overview of Market Manipulation 13
Tlis J. PutniFs
 
2.1 Introduction 14
 
2.2 Definitions of Market Manipulation 16
 
2.2.1 Legal Interpretation and Provisions against Market Manipulation 16
 
2.2.2 Economics and Legal Studies Perspective 18
 
2.3 A Taxonomy of the Types of Market Manipulation 19
 
2.3.1 Categories of Market Manipulation 19
 
2.3.2 Market Manipulation Techniques 22
 
2.4 Research on Market Manipulation 26
 
2.4.1 Theoretical Literature 27
 
2.4.2 Empirical Literature 30
 
2.4.3 Conclusions from the Research on Market Manipulation 35
 
2.5 Summary and Conclusions 39
 
References 40
 
Chapter 3: A Taxonomy of Financial Market Misconduct 45
Ai Deng and Priyank Gandhi
 
3.1 Introduction 46
 
3.2 Challenges in Research on Financial Market Misconduct 50
 
3.3 Defining Financial Market Misconduct 51
 
3.3.1 Price Manipulation 53
 
3.3.2 Circular Trading 54
 
3.3.3 Collusion and Information Sharing 55
 
3.3.4 Inside Information 56
 
3.3.5 Reference Price Influence 56
 
3.3.6 Improper Order Handling 57
 
3.3.7 Misleading Customers 58
 
3.4 Defining Financial Fraud 59
 
3.4.1 Credit Card Fraud 59
 
3.4.2 Money Laundering 60
 
3.4.3 Financial Statement Fraud 60
 
3.4.4 Computer Intrusion Fraud 61
 
3.5 Conclusion 61
 
References 61
 
Chapter 4: Financial Misconduct and Market-Based Penalties 65
Chelsea Liu and Alfred Yawson
 
4.1 Introduction 66
 
4.2 Notable Cases of Financial Reporting Fraud 69
 
4.3 Financial Reporting Misconduct and Legal

Douglas Cumming J.D., Ph.D., CFA, is a Professor of Finance and Entrepreneurship and the Ontario Research Chair at the Schulich School of Business, York University. Douglas has published over 140 articles in leading refereed academic journals in finance, management, and law and economics, such as the Academy of Management Journal, Journal of Financial Economics, Review of Financial Studies, Journal of Banking and Finance, Journal of International Business Studies and the Journal of Empirical Legal Studies. He is the Founding Editor of Annals of Corporate Governance, and Co-Editor of Finance Research Letters, and Entrepreneurship Theory and Practice, and has been a guest editor for 12 special issues of top journals, including Corporate Governance: An International Review, Journal of International Business Studies, Journal of Corporate Finance, Journal of Business Ethics, among others. He is the coauthor of Venture Capital and Private Equity Contracting (Elsevier Academic Press, 2nd Edition, 2013), and Hedge Fund Structure, Regulation and Performance around the World (Oxford University Press, 2013). He is the Editor of the Oxford Handbook of Entrepreneurial Finance (Oxford University Press, 2013), the Oxford Handbook of Private Equity (Oxford University Press, 2013), and the Oxford Handbook of Venture Capital (Oxford University Press, 2013).
 
Carol Alexander is a Professor of Finance at the University of Sussex and Managing Editor of the Journal of Banking and Finance. From 1999 - 2012 she was Chair of Risk Management at the ICMA Centre in the Henley Business School at Reading. From 2010 - 2012 Carol was Chair of the Board of PRMIA (Professional Risk Manager's International Association). Carol has held the following positions in financial institutions: Fixed Income Trader at UBS/Phillips and Drew (UK); Academic Director of Algorithmics (Canada); Director of Nikko Global Holdings and Head of Market Risk Modelling (UK); Risk Research Advisor, SAS (USA). She also