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CAUSES OF INVESTMENT FRAUD DURING THE PERIOD OF ECONOMIC CRISIS
Causes of fraud during economic crisis period are one factor that bothers a lot of people that have lost one thing or the other during turbulent times like a global economic crisis.
Have you ever wondered why we have so many cases of fraud and financial crimes during economic crisis? Economic crisis have a lot of crimes associated with it.
WHAT IS INVESTMENT FRAUD?
Investment fraud is the phrase used to describe a complex situation that involves manipulation of investments and investment strategies just to have result to show for your activities. Investment fraud can be committed by anyone but is more prevalent in the corporate world hence, will dictate the tone of this article.
In this article are four causes of economic crisis in time of economic meltdown. Note however that the points listed below are not exhaustive but just the measure ones.
FOUR MAJOR CAUSES OF FRAUD IN TIME OF FINANCIAL CRISIS
Most of the things you will be reading in this section deals on human psychology that have been tested and validated by authorities that never wished to be given publicity.
In times of hardship, stakeholders who have made one form of investment in a company in the past will mount pressure on the management of that company to make enough profit so that more will be given to them in the form of dividend payout. This is why many fraud fighters will tell you that fraud especially financial statement frauds are committed by managers. Again, managers will be willing to manipulate financial statements in the favour of major stakeholders in the company so as to be guaranteed that preferential treatment will be given to them by way of improved remuneration. This now leads us to the second factor that causes fraud during the period of economic crisis.
FEAR OF LOSING ONES JOB
Managers due to the lack of job and lack of job security dance to the tone of any music played by the employers of labour. Nobody wants to lose his or her job- at least not now that the world economy is still shaking. This is evidenced by the number of bankruptcy case that is going on every day.
FAMILY PRESSURE: Pressures from family members also contribute to the high prevalence rate of investment fraud in our society. People with criminal mind, end up looking for whom to rip off their money just to satisfy the needs of their loved ones.
POOR FINANCIAL MANAGEMENT
The above are just few of the causes of high rate of fraud during economic crisis. They are gathered and compiled from my personal experience as a forensic accountant.
Investment fraud in our society has come to stay but with the help of all and sundry, we can do our best to reduce it.