Financial Fraud: A Game of Cat and Mouse

Finance;Regulation;Quantitative Finance

Gornall, William

University of Waterloo

关键词: Finance;    Regulation;    Quantitative Finance;   

Others  :  https://uwspace.uwaterloo.ca/bitstream/10012/5261/1/gornall-will-masters-thesis-final.pdf

瑞士|英语

来源: UWSPACE Waterloo Institutional Repository

【 摘 要 】

This thesis models rational criminals and regulators with flawed incentives. In it we develop a rational model of crime and regulation that we use to show the SEC;;s current incentive structure is ineffective at preventing fraud. Under our model, criminals balance the monetary rewards of larger frauds against an increased chance of being apprehended; and regulators design regulations tominimize either the damage caused byfraud orsome other metric. We show that under this model, the SEC;;s focus on ;;stats;; and ;;quick hits;; leads to large frauds and a large social loss. We argue that regulators need to focus not just on successful prosecutions, but also on harm reduction and deterrence.