1. How did trust contribute to Mr. Armstrongs fraud? 2. In the chapter, lack of access to...
2. In the chapter, lack of access to information was discussed as one of the factors that provide opportunities for fraud. If investors would have known Mr. Armstrong’s background and had access to other information about him, how would it have affected the fraud? Why?
The following describes an actual investment fraud that occurred:
Mr. Armstrong stands accused in a federal indictment for committing one of the most common frauds in the history of finance: making big promises to investors that he couldn’t deliver. Mr. Armstrong is accused of securities fraud after allegedly trying to cover up millions of dollars in bets on the yen and other markets that went horribly wrong.
It is probably not the ending that the 49-year-old Mr. Armstrong envisioned when he fell in love with business as a boy. It was a love that turned him into an active stamp dealer at just 13 years old, only to be kicked out of the stamp world’s most elite fraternity as a young man in 1972, amid accusations of selling extremely rare stamps that he didn’t own and couldn’t deliver.
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...
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