Uncovering Fraud In Financial Markets
What is
Forensic Finance?
Forensic Finance is the examination of anything that is potentially illegal, illicit, or immoral in financial markets.
The examined events may or may not be happening, could be of a questionable nature, and may or may not be illegal. Empirical academic research is often most useful in settings with detailed data, competing hypotheses, and careful analytical methods.
1
Financial Reporting Misconduct
Financial reporting misconduct includes misreporting by corporations and investment firms, misreporting and related issues in structured finance (e.g., residential and commercial mortgage-backed securities), and misreporting of environmental, social, and governance measures, often referred to as greenwashing.
2
Financial Market Misconduct
Financial market misconduct encompasses a range of illegal and illicit activities within financial markets, including market manipulation, insider trading, and the use of cryptocurrencies for illegal transactions, such as those associated with darknet markets and ransomware activities​.
3
Financial Advisor Misconduct
Financial advisor misconduct involves unethical or illegal actions by financial advisors and brokers, such as providing misleading advice, engaging in fraudulent activities, and misappropriating client funds, often leading to significant financial losses for clients and undermining trust in the financial advisory industry​.
4
Public Finance Misconduct
Public finance misconduct refers to the mismanagement or misappropriation of public funds by government officials or entities, which can include corruption, embezzlement, and fraud, adversely affecting public resources and eroding public trust in government institutions.
The research conducted through forensic finance has significant real-world implications for legislation and rule-making in the financial sector.
By uncovering the intricacies of financial fraud and unethical market practices, their findings inform regulatory bodies such as the SEC on the vulnerabilities within financial systems. This research provides critical insights that can shape the development of new regulations and enforcement strategies aimed at preventing fraud, enhancing market integrity, and protecting investors.
Latest Publications
March 30, 2023
February 7, 2023
Press
Coverage
Increased press coverage of financial fraud, driven by forensic finance research, has played a crucial role in raising public awareness and making complex financial misconduct more accessible to a wider audience. News outlets and media platforms have amplified key findings, allowing both academics and everyday individuals to become better informed about the risks and realities of financial fraud.