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In financial markets
In financial services industry (including banking and insurance)
Insurance fraud
Telecommunication-related fraud Securities-related fraud
Computer-related fraud
Types of Reports: Cash Transaction Reports (CTR), Suspicious Transaction Report (STR), Counterfeit Currency Report (CCR)
Reporting to RBI Other guidelines are also given under the Act to curb the menace of money laundering Compliance to Anti-Money Laundering Standards
1. Internal fraud against the insurer committed by an employee; 2. Policy holder/claims fraud committed against the insurer, in the purchase and/or execution of an insurance product by obtaining wrongful coverage or payment; and 3. Intermediary fraud committed against the insurer or policy holders by intermediaries independent broker/agent.
Accountant should present a true and fair view of the financial statement of business operations. The picture the accountant paints can be either enlightening or misleading , depending on how accountant chooses to depict it. Even within law , various practices can be carried out by accountants which are often regarded as being in ethically grey areas. The most common practice of this kind is known as creative accounting. It is a term which is popularly associated with cooking the books in a way which is legal although morally dubious.
A typical aim of creative accounting will be to inflate profit figures. However, Some companies may also reduce reported profits in good years to smooth results. Assets and liabilities may also be manipulated, either to remain within limits such as debt covenants, or to hide problems
The term window dressing has similar meaning when applied to accounts, but is a broader term that can be applied to other areas. In the US it is often used to describe the manipulation of investment portfolio performance numbers. In the context of accounts, window dressing is more likely than creative accounting to imply illegal or fraudulent practices, but it need to do so.
Insider Trading
Insider trading refers generally to buying or selling a security , in breach of a fiduciary duty or other relationships of trust and confidence, while in possession of material, nonpublic information about the security.
Examples of insider trading cases that have been brought by the SEBI are cases against
Corporate officers, directors, and employees who traded the corporations securities after learning of significant, confidential corporate developments; Friends, business associates, family members, and other tippees of such officers, directors, and employees, who traded the securities after receiving such information; Employees of law, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded; Government employees who learned of such information because of their employment by the government; and Other persons who misappropriated, and took advantage of, confidential information from their employers.
Because insider trading undermines investor confidence in the fairness and integrity of the securities markets, the SEBI has treated the detection and prosecution of insider trading violations as one of its enforcement priorities. The main argument against insider trading is that it is unfair to those who do not have the privileged information. There is also the argument that it is the unethical misappropriation of proprietary knowledge ( i.e. Knowledge that only those in the firm should have, knowledge owned by the firm and not to be used by abusing ones fiduciary responsibilities to the firm. Such behaviour also undermines the trust necessary to the proper functioning of a firm. Most important argument against insider trading is that it leads to inefficiency in the markets.
Role of ethics
Ethics plays an important role in finance and sources of ethical behaviour in finance and accounting can be from the following : Code of Conduct for Accountants and Auditors Code of Conduct for Merchant Bankers Code of Conduct for Insurance Agent Code of Conduct for Bankers Code of Conduct for Brokers and Members Code of Conduct for CFO