BDO Stoy Hayward’s definition of ‘fraud’

Thankfully accepting the hat tip to WV&Z from the D&O Diary in its post on the “light touch” approach to regulation in the UK, I would like to add the following note of clarification on the nature of the fraud report mentioned therein which “may be pertinent” (WV&Z’s emphasis) to the question of whether US exchanges are better off without those companies that are ‘avoiding “tougher” US listing requirements’.

The accounting firm BDO Stoy Hayward LLP tracks and reports on a very wide range of frauds that UK businesses in general are subject to. The definitions of ‘fraud’ and ‘fraudster’ it uses for its FraudTrack reports are not limited to listed companies, though it may well be inferred so from the New York Post article the post refers to and the blog White Collar Fraud’s subsequent running with the post and article.

One example of fraud the report tracks is ‘VAT carousel fraud’, which is a tax scam designed to evade Value Added Tax. A main finding in the forthcoming edition referred to is that “[a] very significant cause of the increase [in the value of reported fraud] is the rise of high value ‘VAT carousel frauds’”. It also includes ‘non-corporate’ frauds, such as of individuals “who commit an act against another individual, resulting in financial loss” and of individuals “who commit fraud against the [UK tax authority]”. It is therefore arguably not wholly representative to discuss the report’s findings in the context of securities markets, “London’s share of new listings” and the Committee on Capital Markets Regulation without qualification.

For more about the UK listing requirements, a good source to start with may be the Financial Services Authority (FSA), referred to as the UK Listing Authority in its capacity as the competent authority for listing in the UK.

What’s more: The D&O Diary has updated its post in response to the above and has also posted a comment here.

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