Fighting Fraud with Both Fists

Adam Weisman, and Michael Brodsky

Few people imagined the events of the past two years: case after spectacular case of alleged and actual occurrences of fraud that have shaken not only the financial industry and investor confidence, but also the very core of the global economy. The fallout from the subprime mortgage failure, far-reaching Ponzi schemes, prominent hedge fund closures, and highly publicized SEC and Department of Justice (DOJ) investigations have made it imperative for companies to increase their efforts to combat fraud. Why? Because the potential damage of not addressing fraud risk is so high, including not only the obvious financial risk, but also reputational risk. The mere accusation of wrongdoing in the current fraud-sensitive environment can result in the loss of trust on the part of investors and regulators that a company may never recover from.