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Financial Frauds Essay

3483 words - 14 pages

Topic: The biggest scams in the banking history
Course: Banking
Students: Nino Vepkhvadze, Gohar Trchunyan, Giorgi Menteshashvili & Giorgi Paksashvili
Date: 04.06.2012

A fraud, by definition, is the act of deliberate deception of people to secure an unlawful gain. These are mainly for the purpose of defrauding money as well as prestige rather than immediate financial gain. A study by BBC has revealed that the average woman lies twice a day while a man tells three lies a day. However, the lies they tell differ from each other a lot, both in essence and the results yielded. This is why we decided that the frauds and scams of the banking industry as well as their influence on other ...view middle of the document...

Kerviel had been made a scapegoat at a time when the banking system is trying to atone for its role in the global financial crisis.
In January 2008, Société Générale shocked world markets when it disclosed it had suffered a net loss of €4.9 billion after unwinding a series of wild bets placed by Mr. Kerviel.
As the probe got under way, Mr. Kerviel immediately acknowledged to engaging in years of unauthorized trades, but said that he was just trying to make money for the bank.
Kerviel is not thought to have profited personally from the suspicious trades. Prosecutors say Kerviel has been cooperative with the investigation, and has told them his actions were also practiced by other traders in the company. Kerviel admits to exceeding his credit limits, but claims he was working to increase bank profits. He told authorities that the bank was happy with his previous year's performance, and was expecting to be paid a €300,000 bonus on a €60 million declared profit (approximately 0.5%) which illustrates the definition of "fair pay" in the French investment banks. Family members speaking out say the bank is using Kerviel as a scapegoat to excuse its recent heavy losses.
"Mr. Kerviel only did what he was paid for: speculate," Pierre Laurent, head of France's Communist Party said in a statement. "He was a cog in a machine and his guilt cannot be detached from the whole system."
Nordea Bank under attack
Internet fraudsters stole around ($1.1m) from account holders at Swedish bank Nordea. The theft, described by Swedish media as the world's biggest online fraud, took place over three months. The criminals siphoned money from customers' accounts after obtaining login details using a malicious program that claimed to be anti-spam software.
The hackers used a phishing email that advised bank customers to download a “spam fighting” program called ‘’ or ‘raking.exe’ that loaded what security companies are calling the Trojan.
Obviously the phishers have a sense of humor in calling the software ‘raking’ – for they not only clearly intended raking in the cash, they succeeded in doing so to tune over several million Swedish kroner, or over US $1.1m.
Nordea said it had now refunded the lost money to all 250 customers affected by the scam. Police have said they suspect organized criminals from Russia and United States.
When a user navigated to the Nordea bank login page, the trojan would kick into action, saving the customers login details. It then displayed an error message asking them to resend the information.
Trade newspaper Computer Sweden said the police had traced the fraudulent emails first to computer servers in the US and then to Russia.
Surprisingly, it was in Finland, not either in the US or Russia where the path led. On May 10, 2011, the Finnish police closed on investigation after arresting 17 people suspected of involvement in the fraud.
Two of the suspects allegedly used malware to compromise the online banking...

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