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The laws concerning white-collar crimes vary, depending onthe exact nature of the crimes committed, though many fallunder federal authority (US)...White-collar crime refers to non-violentcrimes committed through deceptivepractices for the purpose of financialgain. Following isthe white-collarcrime dictionary definition. The actualterm "white-collar crime" was coinedby Edwin...
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The laws concerning white-collar crimes vary, depending on
the exact nature of the crimes committed, though many fall
under federal authority (US)...
White-collar crime refers to non-violent
crimes committed through deceptive
practices for the purpose of financial
gain. Following is
the white-collar
crime dictionary definition. The actual
term "white-collar crime" was coined
by Edwin Sutherland, Professor
of Sociology and 29th President
of American Sociological Society.
Sutherland described such crimes as
"a crime committed by a person of
respectability and high social status
in the course of his occupation."
White-collar crimes cover a wide
range of activities, but generally, the
crimes are committed by people who
are involved in otherwise lawful
businesses. The perpetrators often
hold respectable positions in their
communities or businesses, until their
illegal activities are discovered. The
laws concerning white-collar crimes
vary, depending on the exact nature of
the crimes committed, though many
fall under federal authority.
Types of White-Collar Crimes and the
relevant acts regulating the same
The common examples of white-collar crime include fraud,
insider trading, and bribery, etc. White-collar crimes can
often be difficult to prosecute, as the perpetrators take
sophisticated steps to ensure that their illegal activities are
difficult to detect. The most common types of white-collar
crimes are explained below:
and ignored white-collar crime
for too long. It is time the
nations woke up and realized
that it's not the armed robbers
or drug dealers who cause the
most economic harm, it's the
white collar criminals who steal
pensions, bankrupt companies,
and destroy thousands of jobs
Fraud: Fraud is committed by misrepresenting facts in
order to gain something in return. Fraud under the Indian Penal Code is defined as "any behavior by which one person
intends to gain a dishonest advantage over another". In
other words, fraud is an act or omission which is intended
to cause wrongful gain to one person
and wrongful loss to the other, either
by way of concealment of facts or
otherwise. Fraud is defined u/s 421
of the Indian Penal Code and u/s 17
of the Indian Contract Act. There is
no separate legislation dealing with
fraud as in the United Kingdom or
the USA. The expression fraudulently
occurs in Sections 206, 207, 208, 242,
246, 247, 252, 253, 261, 262, 263 and
Sections 421 to 424. Sections 24 and
23 define expressions 'dishonestly'
and 'wrongful gain and wrongful loss.
'Wrongful gain' is gain by unlawful
means of property to which the person
gaining it is not legally entitled.
'Wrongful loss' is the loss by unlawful
means of property to which the person
losing it is legally entitled. Whoever
does anything with the intention of
causing wrongful gain to one person
or wrongful loss to another person is said to do that thing
'dishonestly'. Indian Penal Code recognizes the following
acts as fraud:
• Impersonation
• Counterfeiting
• Wrong weighing and measurement
• Misappropriation
• Criminal breach of trust
• Cheating
• Dishonest dealing in property
• Mischief
• Forgery
• Falsification
• Possessing stolen property
• Concealment
Some examples of recent banking frauds in India are:
- On 14th February 2018, PNB noticed fraudulent
transactions worth '11,346 crore at one of its branches
in Mumbai. Apparently, the branch staff issued fake LoUs
(Letters of Undertaking) for buyer's credit to companies
of Nirav Modi and Gitanjali Group. Companies like
Gitanjali Gems, Gili India, Nakshatra and Nirav Modi are
said to be involved in this scam.
- On 13th June 2017, the promoters of a mining company,
Abhijeet Group, were arrested for being defaulters in loan
payment of over '11,000-15,000 crore from 20 banks
and financial institutions through 132 shell companies
of the group. Abhijeet Group created vehicle company
Jas Infrastructure to provide contract for erection,
procurement and construction of a power plant at Bihar
to its group company Abhijeet Projects and misusing
loan amounts worth '790 crore from Canara Bank and
Vijaya Bank.
Insider Trading: In India, SEBI (Insider Trading)
Regulations, 1992 framed under Section 11 of the SEBI
Act, 1992 are intended to prevent and curb the menace of
insider trading in securities. Insider trading is against the
law if a securities transaction, which is the sale or purchase
of stocks, is engaged in by a person, or small group of
people, inside the company, who have special knowledge
not available to others. The aim of insider trading laws and
regulations is to assure that no one would gain by trading
on 'insider' or 'unpublished' information - information that
is not available to all market participants. The ultimate
goal is to create a level playing field by making information
accessible to all market participants.
Duties and Obligations of the Company
Every listed company has the following obligations under
the SEBI (Prohibition of Insider Trading) Regulations, 1992:
- To appoint a senior-level employee, generally the
Company Secretary, as the Compliance Officer;
- To set up an appropriate mechanism and to frame and
enforce a code of conduct for internal procedures;
- To abide by the Code of Corporate Disclosure practices as
specified in Schedule ii to the SEBI (Prohibition of Insider
Trading) Regulations, 1992;
- To initiate the information received under the initial and
continual disclosures to the Stock Exchange within 5
days of their receipts;
- To specify the close period;
- To identify the Price-Sensitive Information;
- To ensure adequate data security of confidential
information stored on the computer;
- To prescribe the procedure for the pre-clearance of
trade and entrust the Compliance Officers with the
responsibility of strict adherence of the same.
Penalty
The following penalties/punishments can be imposed in
case of violation of SEBI (Prohibition of Insider Trading)
Regulations, 1992:
- SEBI may impose a penalty of up to '25 Crores or three
times the amount of profits made out of insider trading,
whichever is higher
- SEBI may initiate criminal prosecution
- SEBI may issue orders declaring transactions in securities
based on unpublished price-sensitive information
- SEBI may issue orders prohibiting an insider or refraining
an insider from dealing in the securities of the company
Bribery
Bribery is the practice of offering, giving, receiving, or
soliciting something of value for the purpose of influencing
the action of an official in discharge of his/her public or
legal duties. Bribery is a gain to an illicit advantage.
The Parliament on July 24, 2018 passed the Prevention of
Corruption (Amendment) Bill 2018 to enhance transparency
and accountability of the government. The Bill amends
various provisions of Prevention of Corruption Act (PCA),
1988. The Provisions of the Bill included:
- The introduction that the offense of giving a bribe is a
direct offense. However, a person who is compelled to
give a bribe will not be charged with the offense, if he
reports the matter to law enforcement authorities within
seven days
- The Bill makes specific provisions related to giving a bribe
to a public servant and giving a bribe by a commercial
organization
- The Bill redefines criminal misconduct to only cover
misappropriation of property and possession of
disproportionate assets. It does not cover circumstances
where the public official uses illegal means, abuses his
position, or disregards public interest and obtains a valuable thing or reward for himself or another person
- The Bill modifies the definitions and penalties for offenses
related to taking a bribe, being a habitual offender and
abetting an offense
- It introduces the powers and procedures for the
attachment and forfeiture of property of public servants
accused of corruption
Forgery
The altering, making, possession, or use of a falsified
document, such as a check, contract, or other document,
with the intent to defraud or injure the recipient of the
document. This includes such crimes as passing forged
checks and creating, possession, or selling falsified art.
Other Types of White-Collar Crimes include
Telemarketing scams, Tax evasion, Ponzi schemes, Pyramid
schemes, Bank fraud, Racketeering, Healthcare fraud.
The Indian Government over the last few years has been
implementing changes in various acts to bring these crimes
under scrutiny. Some examples of the changes are:
- Prevention of Money Laundering Act, 2002
- Central Vigilance Commission Act, 2003
- Right to Information Act, 2005
- Companies Act, 2013
- Lokpal and Lokayuktas Act, 2013
- Whistle Blowers Protection Act, 2011
- Black Money (Undisclosed Foreign Income and Assets)
and Imposition of Tax Act, 2015
- Insolvency and Bankruptcy Code
Penalties for White-Collar Crime
The criminal penalties for white-collar crimes vary
greatly, depending on the type of crime committed and the
circumstances surrounding the case. Most individuals facing
criminal charges for a white-collar crime have never faced
the criminal justice system, and the process is frightening.
Typically, penalties for white-collar crimes include any
combination of imprisonment, restitution, fines, probation,
and community service. Such crimes that are serious enough
to face prison time may place the perpetrators behind bars
for many years. In fact, US Congress passed the Sarbanes-
Oxley Act of 2002, which increased oversight in corporate
responsibility and mandated financial disclosures, in an
attempt to stem large-scale white-collar crimes. As a result
of the Act, penalties for white-collar crimes involving wire
or mail fraud increased.
In addition to any criminal penalties imposed on a
perpetrator, civil penalties may be imposed for white-collar
crimes, as the victims can file a civil lawsuit against the
perpetrator.
Disclaimer - The views expressed in this article are the personal views of the author and are purely informative in nature.