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Why Does Fraud Occur? (Movie Edition)

Bruce Carton | September 15, 2008

On Tuesday of last week, Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations, spoke at the Southwest Securities Enforcement Conference. Her remarks were on the subject of "Why Does Fraud Occur and What Can Deter or Prevent It?."

Richards stated that she had seen distinct types of fraud in her tenure at the SEC, which she broke down as follows:

The "Grifter" — Fraud committed with intent from the outset, where the person sets out to steal money. These are frauds that are planned in advance, and where the person committing it is acting intentionally to defraud. A "committed fraudster," as she put it.

The "Borrower" — Fraud committed by those who believe that they are merely "borrowing" money, and intend to pay it back. They may do it to cover a shortfall in the firm's revenues or to conceal less-than-expected performance...

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