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A contemporary review of the relationship between the global financial crisis, financial crime and white collar criminals

Ryder, Nicholas



This paper seeks to offer a refreshing and alternative interpretation and identifies a new factor that not only contributed towards the 2008 financial crisis, but continued to thrive in the perfect economic storm: white collar crime. The hypothesis of this paper is that white collar crime is an important factor that contributed towards the 2008 financial crisis. To demonstrate this point, the paper concentrates on the impact of the financial crisis and its relationship white collar crime in the United States of America and the United Kingdom. This comparison presents a unique opportunity to compare and contrast the different approaches towards combating the association between the 2008 financial crisis and white collar crime. The paper will initially demonstrate that the US and the UK have adopted similar legislative and policy reforms towards improving the regulation of their heavily criticised financial services sectors. The similarities are illustrated by the embarrassment of legislative reforms enacted in both countries. For example, in the US this includes the Emergency Economic Stabilization Act 2008, the Housing and Economic Recovery Act 2008, the American Recovery and Reinvestment Act 2009 and the Dodd–Frank Wall Street Reform Act 2012. While legislators in the UK introduced the Banking (Special Provisions) Act 2009, the Financial Services Act 2010, the Financial Services Act 2012 and the Banking Reform (Financial Services) Act 2013. Conversely, the search for the ‘culprits’ or ‘villains’ who caused and contributed the 2008 financial crisis has demonstrated a number of striking differences in both countries. For instance, one of the first legislative measures introduced in the US was the Fraud Enforcement and Recovery Act 2009, which is of great significance in this paper for two reasons. Firstly, the legislation was a direct response to white collar crime that contributed towards the 2008 financial crisis. Secondly, this legislation redressed the imbalance created by President George Bush, who tasked the Federal Bureau of Investigation with tackling the ‘War on Terror’ and maintaining ‘Homeland Security’ at the expense of white collar crime, by providing the Department of Justice with additional funding. This measure can be contrasted with that adopted in the UK, where there has been no direct legislative response to the white collar crime that is associated with the financial crisis. The Coalition government has only created a small number of reactive criminal offences under the Financial Services Act 2012 and the Banking Reform (Financial Services) Act 2013 following several instances of market manipulation that will be addressed towards the end of this paper. Another important contrast between the US and UK relates to the enforcement strategies adopted by law enforcement agencies and regulatory bodies. For example, the FBI has handled over 1,000 criminal prosecutions while the Securities and Exchange Commission has vigorously used its civil enforcement powers against the perpetrators of the financial crisis. Furthermore, the SEC has also imposed record amounts of financial penalties and banned people from working in the financial sector since the start of the financial crisis. Importantly, there is a clear division between the roles of the FBI and SEC, a situation that doesn’t exist in the UK. In the UK, the pursuit of white collar criminals has been lethargically led by the Financial Services Authority, the Financial Conduct Authority and the Serious Fraud Office. There has been some reluctance from these agencies to actively pursue the alleged wrongdoers. For example, both the FSA and SFO were rather averse to investigate the alleged manipulation of the London Interbank Offered Rate in 2010. At the time of writing this paper, the SFO has only secured one criminal conviction in relation to the manipulation of LIBOR, yet it has charged thirteen other individuals. Furthermore, not one director of a bank has been disqualified under the Company Directors Disqualification Act 1986 for their conduct during the 2008 financial crisis. However, it is important to note that the FCA and its predecessor the FSA, has increased the number of prohibition orders, which permit the regulator to ban individuals from working in the financial services sector and imposed record financial penalties on both firms and individuals who have breached its rules and regulations since 2008. A key part of the discussion of the response in the UK will emanate from the sparse resources provided for the SFO by the Coalition government since 2010. Once again, this is an important contrast between the US and the UK. There is no individual or ‘super villain’ that has become the face of white collar crime during the financial crisis despite the illegal activities of notorious white collar criminals including Bernard Madoff and Alan Stanford. The paper concludes that the response by the US and UK governments and its law enforcement and regulatory agencies towards white collar crime during the financial crisis has been lacklustre and they have wrongly prioritised imposing financial penalties at the expense of pursuing criminal prosecutions.


Ryder, N. (2015, June). A contemporary review of the relationship between the global financial crisis, financial crime and white collar criminals. Presented at Centre for European Legal Studies

Presentation Conference Type Lecture
Conference Name Centre for European Legal Studies
Start Date Jun 5, 2015
End Date Jun 5, 2015
Publication Date Jun 5, 2015
Peer Reviewed Not Peer Reviewed
Keywords financial crime, financial crisis, United States of America, United Kingdom
Additional Information Title of Conference or Conference Proceedings : Centre for European Legal Studies


Amsterdam June 2015.ppt (778 Kb)

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