WCC Final Exam with Complete
Solutions
Economic & Technological Systems - Similarities - ANSWER--Both cross international
boundaries
-More interdependent than independent
-Workers possess specialized knowledge
-WCC occur in both systems
Facebok - Zuckerberg - WCC charges: - ANSWER--Copyright infringement
-Securities fraud
-Misuse of computer information
Crimes in the Economic System - ANSWER-• Includes banks, investment companies,
stock markets across the world, commodities markets, and other exchanges and
markets where individuals are able to make investments, purchase raw materials, and
secure goods.
investment frauds - ANSWER-· Crimes in the economic system can be classified as
____________.
Investment Fraud: - ANSWER-when investments made by consumers are managed/
influenced fraudulently by stockbrokers or other officials in the economic system.
Commodities Fraud: - ANSWER-fraudulent sale of raw materials such as gas, oil, gold,
and agricultural materials.
•Warm weather
•Proximity to other countries
•Established telemarketing firms - ANSWER-Commodities Fraud prevalent in FL - Why?
(3)
Types of Securities and Commodities Fraud - ANSWER--Market Manipulation
-Broker Embezzlement
-Hedge fund fraud
-Insider trading
-Futures trading fraud
-Foreign exchange fraud, high-yield investment schemes, and advanced-fee fraud
-Ponzi and pyramid schemes
,Market Manipulation "pump and dump" - ANSWER-o Where executives/officials do
things to artificially inflate trading volume and subsequently affect the price of the
commodity or security.
o Prevalent in gas & electricity markets
Enron: - ANSWER-transferred energy out of California to evade price caps-allowed the
company to charge more for energy than what it was worth.
Market Power: - ANSWER-manipulate the market through aggressive buying and
selling strategies.
Fraud Based: - ANSWER-manipulate the market by distorting information.
(1) Commodity Exchange Act
(2) The Energy Policy Act of 2005
(3) The Energy Independence and Security Act of 2007 - ANSWER-3 Federal laws exist
to "prohibit manipulation of various energy commodities and empower federal agencies
to impose penalties:
FTC: Mission / Created by - ANSWER--Our mission: to prevent business practices that
are anticompetitive. Deceptive, or unfair to consumers
-Created by Woodrow Wilson in response to trusts and monopolies.
The FTC investigates - ANSWER-issues raised by reports from consumers, businesses,
pre-merger filings, congressional inquiries, or media reports
False advertising
Fraud
Identity theft
Broker Fraud: - ANSWER-occurs when brokers fail to meet their legal obligations to
investors. Fail to tell clients important information on how to invest their money properly.
Broker Embezzlement: - ANSWER-occurs when brokers take money that is supposed
to be in an investment account and use it for their own personal use.
Hedgefund: - ANSWER-private investment partnership of high net worth clients
Hedge Fund Fraud: - ANSWER-refers to fraudulent act perpetrated in hedge fund
systems.
•Lie on account status in order to make commission.
Strategies against hedge fund fraud - ANSWER--Hiring external agencies to do internal
compliance
-Developing a hedge fund information depository
-Conducting routine assessments of compliance officers with the aim of evaluating their
effectiveness.
, Insider trading regularly occurs... - ANSWER-(occurs) in hedge funds.
Insider trading (within hedge funds) - ANSWER--When individuals share/steal
information that is "material in nature" for future investments.
• Stock values, mergers, etc
• Usually more than one person
"Material in nature": - ANSWER-information that must be significant enough to have
affected the company's stock price had the information been available to the public.
• Futures trading Fraud: - ANSWER-refers to fraud occurring in the trading of futures
contracts and options on the futures trading market.
• Futures Contracts: - ANSWER-agreements to buy or sell a given unit of commodity at
some future date.
Types of futures trading fraud - ANSWER-Prearranged trading
Front running
Bucketing
Prearranged trading: - ANSWER-brokers first agree on a price then act out the trade as
a piece of fiction in the pit, thereby excluding other potential bidders from the offering.
Front running: - ANSWER-brokers take advantage of the special knowledge about a
pending custom order and trades his/her own account before executing that order.
Bucketing: - ANSWER-a floor trader will take a position opposite that of a customer's
position, either directly or by using another floor trader, again in collusion.
Commodity Futures Trading Commission (CFTC) - ANSWER-To limit the extent of fraud
in futures markets, in 1974 the ____________ was created.
Foreign Exchange Fraud: - ANSWER-occurs when brokers or other officials induce
"victims to invest in the foreign currency exchange market" through illegitimate and
fraudulent practices.
High Yield Investment Schemes: - ANSWER-promise investors low-risk or even no-risk
investment strategies, when in fact the funds are not actually invested.
Advanced-Fee Fraud: - ANSWER-occurs when investors are promised certain actions
in exchange for an up-front fee. Investors are pressured to invest and pay the broker,
and never receive any services.
Ponzi and Pyramid schemes - ANSWER-scam investors by paying them from future
investors' payments into the offender's scheme.
Solutions
Economic & Technological Systems - Similarities - ANSWER--Both cross international
boundaries
-More interdependent than independent
-Workers possess specialized knowledge
-WCC occur in both systems
Facebok - Zuckerberg - WCC charges: - ANSWER--Copyright infringement
-Securities fraud
-Misuse of computer information
Crimes in the Economic System - ANSWER-• Includes banks, investment companies,
stock markets across the world, commodities markets, and other exchanges and
markets where individuals are able to make investments, purchase raw materials, and
secure goods.
investment frauds - ANSWER-· Crimes in the economic system can be classified as
____________.
Investment Fraud: - ANSWER-when investments made by consumers are managed/
influenced fraudulently by stockbrokers or other officials in the economic system.
Commodities Fraud: - ANSWER-fraudulent sale of raw materials such as gas, oil, gold,
and agricultural materials.
•Warm weather
•Proximity to other countries
•Established telemarketing firms - ANSWER-Commodities Fraud prevalent in FL - Why?
(3)
Types of Securities and Commodities Fraud - ANSWER--Market Manipulation
-Broker Embezzlement
-Hedge fund fraud
-Insider trading
-Futures trading fraud
-Foreign exchange fraud, high-yield investment schemes, and advanced-fee fraud
-Ponzi and pyramid schemes
,Market Manipulation "pump and dump" - ANSWER-o Where executives/officials do
things to artificially inflate trading volume and subsequently affect the price of the
commodity or security.
o Prevalent in gas & electricity markets
Enron: - ANSWER-transferred energy out of California to evade price caps-allowed the
company to charge more for energy than what it was worth.
Market Power: - ANSWER-manipulate the market through aggressive buying and
selling strategies.
Fraud Based: - ANSWER-manipulate the market by distorting information.
(1) Commodity Exchange Act
(2) The Energy Policy Act of 2005
(3) The Energy Independence and Security Act of 2007 - ANSWER-3 Federal laws exist
to "prohibit manipulation of various energy commodities and empower federal agencies
to impose penalties:
FTC: Mission / Created by - ANSWER--Our mission: to prevent business practices that
are anticompetitive. Deceptive, or unfair to consumers
-Created by Woodrow Wilson in response to trusts and monopolies.
The FTC investigates - ANSWER-issues raised by reports from consumers, businesses,
pre-merger filings, congressional inquiries, or media reports
False advertising
Fraud
Identity theft
Broker Fraud: - ANSWER-occurs when brokers fail to meet their legal obligations to
investors. Fail to tell clients important information on how to invest their money properly.
Broker Embezzlement: - ANSWER-occurs when brokers take money that is supposed
to be in an investment account and use it for their own personal use.
Hedgefund: - ANSWER-private investment partnership of high net worth clients
Hedge Fund Fraud: - ANSWER-refers to fraudulent act perpetrated in hedge fund
systems.
•Lie on account status in order to make commission.
Strategies against hedge fund fraud - ANSWER--Hiring external agencies to do internal
compliance
-Developing a hedge fund information depository
-Conducting routine assessments of compliance officers with the aim of evaluating their
effectiveness.
, Insider trading regularly occurs... - ANSWER-(occurs) in hedge funds.
Insider trading (within hedge funds) - ANSWER--When individuals share/steal
information that is "material in nature" for future investments.
• Stock values, mergers, etc
• Usually more than one person
"Material in nature": - ANSWER-information that must be significant enough to have
affected the company's stock price had the information been available to the public.
• Futures trading Fraud: - ANSWER-refers to fraud occurring in the trading of futures
contracts and options on the futures trading market.
• Futures Contracts: - ANSWER-agreements to buy or sell a given unit of commodity at
some future date.
Types of futures trading fraud - ANSWER-Prearranged trading
Front running
Bucketing
Prearranged trading: - ANSWER-brokers first agree on a price then act out the trade as
a piece of fiction in the pit, thereby excluding other potential bidders from the offering.
Front running: - ANSWER-brokers take advantage of the special knowledge about a
pending custom order and trades his/her own account before executing that order.
Bucketing: - ANSWER-a floor trader will take a position opposite that of a customer's
position, either directly or by using another floor trader, again in collusion.
Commodity Futures Trading Commission (CFTC) - ANSWER-To limit the extent of fraud
in futures markets, in 1974 the ____________ was created.
Foreign Exchange Fraud: - ANSWER-occurs when brokers or other officials induce
"victims to invest in the foreign currency exchange market" through illegitimate and
fraudulent practices.
High Yield Investment Schemes: - ANSWER-promise investors low-risk or even no-risk
investment strategies, when in fact the funds are not actually invested.
Advanced-Fee Fraud: - ANSWER-occurs when investors are promised certain actions
in exchange for an up-front fee. Investors are pressured to invest and pay the broker,
and never receive any services.
Ponzi and Pyramid schemes - ANSWER-scam investors by paying them from future
investors' payments into the offender's scheme.
