Since companies now have developed financial markets internationally so competition, mergers and acquisitions are on a constant rise nowadays. But this has also increased the risk of frauds since making money is not an easy task in these markets now and some are tempted to invent shortcuts that pay more (Lluch, C.A., A. Powell and R.A. Williams, 1977). This often results in frauds and the senior management is held responsible, it incurs huge losses and at times complete close downs.
In the case of SoccGen, Jerome Kerveil’s fraud has led the management to pay for it and suffer and the future of the bank is still unclear. The fraud was made in the equity derivatives division which generated 40% of their profits. Government has come up with its own regulations to control the market and this has affected the companies negatively. Since BSkyB’s holdings in ITV is now supposed to be reduced from 17.9% to 7.5% as the government has required of the company (Lluch,C.A., A. Powell and R.A. Williams, 1977). Companies around the world are dependent on foreign markets in some way or the other. If some become over dependant then they have to face the music. Spanish banks have been increasingly dependent on the European Central Banks and mainly for repos, asset and mortgage backed securities. The global trade has a new face in the world and acquisitions are on a rise with S&N about to be taken over by Carlsberg and Heinekin (Mitchell, B.R; 1993). The rivalry in acquiring companies has also increased and this has made business tougher since competition has increased and investments have to be increased as a result. This is cost to companies and yielding high profits is increasing. Go Similarily, Vale has to pay an extra price or 45% premium for acquiring Xstrata (Bhagwati, Jagdish, 2007).
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