May 19, 2020

How to Steer Clear of Unprincipled Advisors and Fraudsters

business tips
Fraud
money matters
Finance
Bizclik Editor
4 min
How to Steer Clear of Unprincipled Advisors and Fraudsters

Written by Neil Behrmann

Be very careful if you recently retired or came into money and you’re looking for a safe investment. You could be a very attractive target for a crook. Once your money is gone, it can be impossible to get it back.
 
Mass Market Fraud
 
Mass Market Fraud is a type of fraud which aims to make victims part with their money by promising cash, prizes, services and high returns on investment. Examples include foreign lotteries, 'boiler room' frauds and correspondence scams where fraudsters purport to act on behalf of bona fide charities and institutions and ask you to provide money and personal information. The majority of these frauds are committed from overseas by way of email, telephone or letter to victims. Classic scams include: “Congratulations! You've won the X Lottery!”; a 'cold caller' phone call offering high returns on new stock listings and other stocks;  off-plan real estate investment via brochure; an email claiming that a friend abroad has lost her money, cards etc.; a request for charity from Africa or a lottery requiring personal bank details.
 
Commodity Scams
 
• Be wary of any firm or individual offering to sell you commodity futures or options on commodities, including: precious metals, such as silver or gold; foreign currency, such as Euros, Yen or Deutschmarks; or crude oil, heating oil, unleaded gas, or agricultural products such as corn, soybeans, or cattle. Be wary of any firm or individual offering to trade your money for you in commodity futures or options, or to pool your money with other customers.
 
• Predictions or guarantees of large profits. Always get as much information as you can about a firm or individual’s track record and verify that information—even if you know the people involved or they are recommended by friends or relatives. If you can’t get solid information about your investment and the company, don’t invest. Before you invest, always check it out with someone whose financial advice you can trust.
 
• Be suspicious if the firm or individual says there is little risk. Be suspicious if someone tells you that a written risk disclosure statement is only a routine formality. Written risk disclosure statements are important to read thoroughly and understand.
 
• If a firm claims that they will trade foreign currency for you in the interbank market, or that you should trade in the interbank market, be cautious. The term “interbank market” refers to a loose network of currency transactions negotiated between financial institutions, usually banks and investment banks, and other large companies.
 
Ultimately, the real truth is that if it sounds too good to be true, then it most certainly is.
 
Some Hedge Fund investor questions suggested by UK Serious Fraud Office
  • Are you satisfied that the fund has a truly independent board in place?
  • Do members of the board also hold posts on a large number of other boards?
  • Is the fund exempt from regulatory oversight?
  • Has the fund disclosed an external, independent well known auditor?
  • Is the fund manager controlling valuations and providing portfolio prices and is it difficult to verify the value of the assets?
  • Is the fund valued independently?
  • Have the prime brokerage, auditor, directors or administrators changed?
  • Do many employees leave the organization and do key members of staff have any criminal records or are involved in civil disputes?
  • Have there been any regulatory actions against the hedge fund manager?  Have the fund managers consistently displayed perfect market timing (the Madoff scam)?
  • Have there been unusual transfers or activity near a quarter or year end?
  • Is there an apparent restriction on access to the fund to elite investors?
  • Has the fund taken large positions in companies? This may indicate an intention to sell a proportion of the holdings to influence the value of the remainder.
  • Have there been any market rumors and/or complaints from investors about the fund and its management? Is there inadequate disclosures and transparency on trading positions? 
  • Have there been any misrepresentations in investor communications? This may be in relation to returns or the background of the fund managers.
  • Have the returns displayed month on month been inconsistent with the indices and the performance of peers?
  • Are key functions of the business controlled by a tiny group?
  • Is the administrator knowledgeable about the fund strategy and independent?
  • Are you satisfied that there is an independent custodian?
  • Have redemptions been actively discouraged?  Have there been many redemption requests?  Have there been any failures to honor redemption requests?
  • Have the financial reports been timely, are the reports easy to understand and is the manager responsive to questions?
  (Source UK Serious Fraud Office and Commodity Futures Trading Commission)
 
About the Author: Journalist Neil Behrmann is author of Trader Jack: The Story of Jack Miner, about a teenager caught up in a Russian Mafia and hedge fund fraud (www.thestoryofjackminer.com).

Share article

Jun 8, 2021

Six issues at the top of tax and finance leaders’ agenda

Tax
Compliance
financeleaders
Deloitte
Kate Birch
4 min
As businesses accelerate their transformation journeys, tax leaders are under increasing pressure to add strategic value. Deloitte reveals six tax trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.

According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.

And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.

Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.

Trend 1: Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”

Trend 2: Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.

Trend 3: Digital tax administration is moving faster than expected

in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."

Trend 4: Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.

At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”

Trend 5: Skillsets are shifting

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact 

Trend 6: 2020 brought productivity improvements

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

Share article