What Are White Collar Crimes?
White-collar crime is a non-violent crime where the primary motive is typically financial in nature. White-collar criminals usually occupy a professional position of power and/or prestige, and one that commands well above average compensation. The term “white-collar crime” was coined in the 1930s by sociologist and criminologist Edwin Sutherland. He used the phrase to describe the types of crimes commonly committed by “persons of respectability” – people who are recognized as possessing a high social status.
In this article, Team YLCC brings you a comprehensive overview on the 10 White Collar Crimes in India. Read on!
1. FRAUD
Fraud is a broad term that encompasses several different schemes used to defraud people of their money. One of the most common and simplest is the offer to send someone a lot of money (say, 5 lakh rupees) if they will simply send the fraudster a little money (say, 1 lakh rupees – the fraudster may represent the smaller sum as being a processing or finder’s fee). Of course, the fraudster gets the money that is sent to him but never sends out the money he promised to send.
Over the years, India has had its fair share of massive financial frauds including the ongoing DHFL Case, which is being termed as India’s biggest bank fraud till date.
2. INSIDER TRADING
Insider trading is trading done with the benefit of the trader possessing material, non-public information that gives him or her an advantage in the financial markets. For example, an employee at an investment bank may know that Company A is preparing to acquire Company B. The employee can buy stock in Company B with the expectation that the company’s stock will rise significantly in price once the acquisition becomes public knowledge.
The case of Hindustan Lever limited (HIL) Vs SEBI, was one of the earliest cases where SEBI acted against Insider trading, in this particular case around 8 lakhs shares were bought by HIL from the Unit Trust of India, and after some weeks a merger was announced between HIL and the other subsidiary. SEBI carried out an investigation and it was held that it was a case of Insider Information, an appeal was made to the Appellate authority and they confirmed the order of the SEBI rejecting the arguments given by HIL denying having the information or knowledge for the same. After this case SEBI made an amendment to the regulations and added and defined the word unpublished. This was the origin for the definition of the term ‘Unpublished Price Sensitive Information in India’.
In another case of Reliance Industries limited (RIL) Vs SEBI, RIL had a stake of around 5 % in the L&T company and further there were two nominees for the company Mr. Mukesh and Anil Ambani. Further, RIL went on purchasing stake in L&T and almost got around 10 %. RIL further made a sale of these shares above the market price to Grasim Industries as a result of which the two nominees were removed and RIL was prohibited from further trading in shares of L&T.
3. PONZI SCHEMES
Named after Charles Ponzi, the original perpetrator of such a scheme, a Ponzi scheme is an investment scam that offers investors extremely high returns. It pays such returns to the initial investors with the newly deposited funds of new investors.
When the scammer is no longer able to attract a sufficient number of new clients to pay off the old ones, the scheme collapses like a house of cards, leaving many investors with huge losses. A good example of this would be the Saradha Chit Fund scam in the state of West Bengal. The Sarada group was incorporated in 2006 and named after Sarada Devi, the spiritual consort of the mystic Ramakrishna Paramahansa. It employed various ruses to lure investors, mainly in West Bengal, and evade the Securities and Exchange Board of India’s oversight.
It quickly built up a wide network by returning almost 40% of the money deposited by the initial band of investors. When it collapsed in April 2013, it caused an estimated loss of Rs 200-300 billion to more than 1.7 million depositors.
4. IDENTITY THEFT AND OTHER CYBERCRIMES
Identity theft and computer system “hacking” are two of the most widespread computer crimes. It’s estimated that losses from identity theft in the United States alone totalled nearly $2 billion in 2019. California, with over 73,000 cases of identity theft reported, was the state whose citizens suffered the most from the crime – Florida was a very distant second with 37,000 reported cases.
India too, has had its fair share of identity thefts and other cybercrimes, which has resulted into a number of rules and regulations, as well as specialised statutes.
5. EMBEZZLEMENT
Embezzlement is a crime of theft, or larceny, that can range from an employee taking a few dollars out of a cash drawer to a complex scheme to transfer millions from a company’s accounts to the embezzler’s accounts.
6. COUNTERFEITING
Our money has become more colourful and expanded in detail because it had to in order to combat counterfeiting. With today’s computers and advanced laser printers, the old currency was just too easy to copy. However, it’s questionable how successful the government’s efforts in this area have been. Rumour has it that very high-quality copies of the new $100 bill were available within 24 hours of the new bill first being issued.
7. MONEY LAUNDERING
Money laundering is a service essential to the needs of criminals who deal with large amounts of cash. It involves funneling the cash through several accounts and eventually into legitimate businesses, where it becomes intermingled with the genuine revenues of the legitimate business and is no longer identifiable as having originally come from the commission of a crime.
8. ESPIONAGE
Espionage, or spying, is typically a white-collar crime. For example, an agent of a foreign government that wants to obtain part of Apple Inc. technology might approach an employee at Apple and offer to pay them $10,000 if they will provide a copy of the desired technology.
YLCC would like thank the Content Team for their valuable insights in this article.
