The origins of modern financial crime historical foundations and current problems in britain

‘In this scrupulously researched book, Sarah Wilson brilliantly exposes the historical roots and contemporary consequences of financial crime, tracing the evolution of legal, popular and social scientific understandings of financial fraud over the past two centuries, and provides an important corrective to the mistaken idea that white-collar crime is a product of the twentieth century and its various technological revolutions The story of the long-running battle between the forces of fairness and transparency versus those of fraud and exploitation has rarely been so trenchantly told.’ Michael L Benson, Professor, School of Criminal Justice, University of Cincinnati, USA ‘This is an impressive study of how we think about what constitutes the boundary of legitimate business activity Rarely can a history have been so important in understanding the present and Sarah Wilson’s book frames current financial regulation within the context of not just historical narrative, but a historiographical appreciation of past and present This should inspire and encourage other scholars to investigate how legal ideas relate to the social and economic history of business.’ Roy Edwards, Management School, University of Southampton, UK ‘This excellent book is a “must-read” for anybody working in the field of financial crime, practitioner or academic lawyer Financial crime has contributed to the global financial crisis and remains endemic in some business circles In explaining how we have arrived at this position, Dr Wilson is able to offer readers some extremely important thoughts as to how the future response should best be framed.’ Jonathan Fisher QC, practising barrister and Visiting Professor at the London School of Economics, UK ‘Dr Sarah Wilson has produced an excellent commentary on the evolution and development of financial crime in the United Kingdom The monograph is timely, unique and a very significant piece of work and Dr Wilson must be commended for producing an intriguing and thought-provoking commentary on a significant multidisciplinary topic.’ Nicholas Ryder, Professor in Financial Crime, University of the West of England, Bristol, UK This page intentionally left blank The Origins of Modern Financial Crime The recent global financial crisis has been characterised as a turning point in the way we respond to financial crime Focusing on this change and ‘crime in the commercial sphere’, this text considers the legal and economic dimensions of financial crime and its significance in societal consciousness in twenty-firstcentury Britain Considering how strongly criminal enforcement specifically features in identifying the post-crisis years as a ‘turning point’, it argues that nineteenth-century encounters with financial crime were transformative for contemporary British societal perceptions of ‘crime’ and its perpetrators, and have lasting resonance for legal responses and societal reactions today The analysis in this text focuses primarily on how Victorian society perceived and responded to crime and its perpetrators, with its reactions to financial crime specifically couched within this It is proposed that examining how financial misconduct became recognised as crime during Victorian times makes this an important contribution to nineteenth-century history Beyond this, the analysis underlines that a historical perspective is essential for comprehending current issues raised by the ‘fight’ against financial crime, represented and analysed in law and criminology as matters of enormous intellectual and practical significance, even helping to illuminate the benefits and potential pitfalls which can be encountered in current moves for extending the reach of criminal liability for financial misconduct Sarah Wilson’s text on this highly topical issue will be essential reading for criminologists, legal scholars and historians alike It will also be of great interest to the general reader Sarah Wilson is an academic lawyer with a background in history She has worked on financial crime, both as it affects society today and in its historical origins, for the last ten years A full-time academic, she has worked at Leeds, Keele and Manchester Universities and is currently at York Law School, the University of York Routledge SOLON Explorations in Crime and Criminal Justice Histories Edited by Kim Stevenson, University of Plymouth, Judith Rowbotham, Nottingham Trent University and David Nash, Oxford Brookes University This series is a collaboration between Routledge and the SOLON consortium (promoting studies in law, crime and history), to present cutting-edge interdisciplinary research in crime and criminal justice history, through monographs and thematic collected editions which reflect on key issues and dilemmas in criminology and socio-legal studies by locating them within a historical dimension The emphasis here is on inspiring use of historical and historiographical methodological approaches to the contextualising and understanding of current priorities and problems This series aims to highlight the best, most innovative interdisciplinary work from both new and established scholars in the field, through focusing on the enduring historical resonances to current core criminological and socio-legal issues Shame, Blame and Culpability Crime and violence in the modern state Edited by Judith Rowbotham, Marianna Muravyeva and David Nash Policing Twentieth Century Ireland A history of An Garda Síochána Vicky Conway Capital Punishment in Twentieth-Century Britain Audience, justice, memory Lizzie Seal The Origins of Modern Financial Crime Historical foundations and current problems in Britain Sarah Wilson The Origins of Modern Financial Crime Historical foundations and current problems in Britain Sarah Wilson First published 2014 by Routledge Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2014 Sarah Wilson The right of Sarah Wilson to be identified as author of this work has been asserted by her in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Wilson, Sarah, 1971The origins of modern financial crime in Britain : historical foundations and current problems / Sarah Wilson First Edition pages cm (Routledge SOLON exploration in crime and criminal justice histories ; 4) Includes bibliographical references and index ISBN 978-0-415-62763-4 (hardback) ISBN 978-0-203-10193-3 (ebook) Commercial crimes Great Britain History I Title HV6771.G7W55 2014 364.16’80941 dc23 2013046881 ISBN: 978-0-415-62763-4 (hbk) ISBN: 978-0-203-10193-3 (ebk) Typeset in Times New Roman by GreenGate Publishing Services, Tonbridge, Kent Contents General series introduction Acknowledgements ix xi Introduction 1 The search for the ‘lexicon’ of financial crime: ‘business crime’ in legal definition and societal consciousness 18 The ‘problem’ of financial crime: interdisciplinary perspectives on historiographical representations 48 Business, crime and ‘status’: what is missing from current understanding? 73 Locating Victorian experiences of financial crime in a ‘trajectory’: forwards and backwards 101 Victorian responses to financial crime: illustrating ‘transformative understandings’ of crime 128 The rhetoric of capitalism and the language of criminal proceedings: a ‘different’ type of deviance and the search for the ‘lexicon’ of financial crime 157 Anxiety, determination and businessmen as [criminal] policymakers 188 viii Contents The ‘lexicon’ of financial crime in the twenty-first century understood as a complex legacy of Victorian experiences Bibliography Index 210 233 250 General series introduction The volumes in this series contribute to the unashamedly interdisciplinary exercise in which SOLON has engaged since its inception in 2000: something now enhanced by the collaboration with Routledge to present cutting-edge interdisciplinary research in crime and criminal justice history The focus is on issues which, while rooted in the past, also have a crucial current resonance, and so the volumes reflect on key issues and dilemmas which persist in terms of contemporary priorities ***** This volume, on financial crime and the vocabulary, or lexicon, used to delineate it and so define how it is comprehended, is highly topical Since 2007–8, the language of financial crisis and of criminality associated with that crisis, has been a consistently dominant story in the media globally, as the scale of individual harm associated initially with the US sub-prime mortgage scandal remains newsworthy Revelations of financial unsoundness and concerns about mismanagement would then generate a number of institutional scandals in the UK banking sector, concerning most centrally Northern Rock, Royal Bank of Scotland (RBS) and Halifax Bank of Scotland (HBOS), with these and scandals surrounding the misselling of a range of financial products shocking many on account of the risks involved, and also the magnitude of apparent deception It has been felt to be a betrayal by institutions that have been considered to be the engines of modernity – driving nations around the world to socio-cultural improvements based on the economic successes guaranteed by such institutions Financial crime was not new in 2008, but governments had assured their populations that these institutions were now properly regulated and could be trusted – that while (sadly and inevitably) individual ‘rogues’ would slip through the net, mass criminality was a thing of the past When criminality such as that of Robert Maxwell was uncovered, therefore, it was shocking – but in a normative way We expect to be shocked when someone misuses their position in society to behave inappropriately, especially when that improper conduct actually becomes criminal Such events force us to concentrate on the issue which has caused the shock, and to enquire into it – but not necessarily to question the mechanisms identifying it as shocking to Bibliography 243 Ibbetson, D., A Historical Introduction to the Law of Obligations, Oxford: Clarendon, 1999 Ignatieff, M., A Just Measure of Pain: the Penitentiary in the Industrial Revolution, Cambridge: Cambridge 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attorneys’ reliance on 219–20; judicial mistrust of 220 ‘acquiescing’ in crime, as lesser offence than committing 225–6 activity, approach to crime based on 176–7, 181, 185 actor characteristics, focus on 176–7 Administration of Justice Act 1970 197n Administration of Justice Act 1981 197n Alborn, Timothy L 66 alcohol consumption, in Victorian society 59–60 Alderson, Baron 166, 168, 180–1, 186, 203, 206, 227 American Sociological Society 79 Andrew, Donna T 105–6 Ashe, T Michael 34, 42–3 Association of Private Country Bankers 208n Atiyah, Patrick S 110n, 151 Aubert, Vilhelm 22–3 Baker, Sir John 11 Ballantine, William, Serjeant 49 Bank Charter Act 1844 148n, 208 Bank of England: appointment of Standing Counsel 198–9; destabilisation (1840s) 113; role in system regulation 13–14, 14n Bank of England Acts (dates various) 208 bankruptcy, legislation relating to 148–9 banks/banking industry: 21st-century misconduct 133–4; prosecution for non-fraudulent activities 157; prosecutions in best interests of 206–7; provincial 152, 209; Victorian concerns over 133, 135–6, 142–3, 189–90, 206, 208–9 Barnier, Michel 39n Bates, Robert Makin 84n, 89n, 103n, 144, 153, 165–6 BCCI (Bank of Credit and Commerce International) 106 Bear Stearns 2–3 Beccaria, Cesare 174n benchmarks, manipulation of 39–40 Benson, Michael 23, 78, 99 Bentham, Jeremy 131n Bequai, August 25, 45 Berge,Wendell 80n Berle, Adolf 135n, 150 Bethell, Sir Richard AG 143, 205n Black, Julia 44–5 Blackstone, W.E 131–2 ‘Bloody Code’ 58–9; abandonment 105; declining belief in 59–60, 174 Blue Arrow 26 Bodkin(-Poland), Henry 166, 177–8, 177n, 179–80, 198, 205 Bourdieu, Pierre 122, 144, 163, 199n Bowyer, George, MP 145n Bramley-Moore, John 119n Brassey, Thomas 121 Bray v Ford [1896] AC 44 145n Bright, John 125 Brougham, Lord 124–5 Brown, Humphrey 225 Brunel, Isambard Kingdom 121 Bubble Act 1719–20 103, 106–7, 106n, 108, 115, 115n; repeal (1825) 108, 115–16 Index Burns, Robert P 165n Byles, Serjeant 183 Cameron, Hugh Innes 225 Campbell, Lord 85n, 114n, 140, 160, 168, 181, 185–6, 200, 203, 219, 220–1, 225 capital markets law 35–6 capital punishment, range of offences subject to 59–60, 86 capitalism: alignment of law with 173; application to railway expansion 111–12; formative institutions 116; legal framework 215; opportunities for dishonesty 87, 103, 170–1 Carney, Mark 5–6, 5n Chadwick, Edwin 81–2, 87n, 95–6, 151n, 211 Charity Commissioner(s), creation of office 142n charity law 142n City of Glasgow Bank, trial of directors (1878–9) 70, 70n, 156, 156n, 165, 168–9, 172n, 184, 186, 202, 204, 209, 212; defence strategies 220–2; sentences 224–6 City of London: as ‘cosy club’ 211n; encouragement/discouragement of prosecutions 204, 206, 208–9, 216–17; importance in Victorian world 168–9; involvement in financial crime 213 ‘civil-criminal interface’ 56–7, 57n Cole, Joseph Windle 186, 189–92, 190n, 202, 205, 212, 221; (alleged) motives 181–2, 217–19, 222; sentence 181, 191, 222, 224 Cole, Margaret 31, 39, 74–5 Coleridge J 191–2, 205, 224 Collins, Michael 66 Commercial Court 196–8, 199 Companies Act 1862 118 Companies Act 1985 196n Companies Act 2006 118n, 173n, 196, 215n company directors 135–8; disclosure obligations 137–8; dual function 194; duties 173n; legal favouring of 215; position in law 142–3 Company Securities (Insider Dealing) Act 1985 33 computer crime 25 concession theory 125 Conningham, William MP 205n conspiracy to defraud, offence of 28 251 Corfield, Penelope J 62n ‘criminal classes,’ Victorian notions of 60–1, 62–3, 82–3, 158–9, 178 Criminal Justice Act 1987 26, 26n Criminal Justice Act 1993 31, 32n, 34, 35, 43 Criminal Offences Gateway Guidance (Ministry of Justice, 2011) 40 criminology, study of 17, 73n, 161–2, 232; lacunae in 73 Crown Prosecution Service 132 Crystal Palace Company 91 Dalhousie, Lord 123, 150n Davidson, Daniel Mitchell 190, 190n, 205, 218 defence strategies 167; reliance on accountancy 219–20; stress on good character/background 183–4; stress on good intent 221–2, 224 deliberate harm, as criterion for criminal liability 143 Denman, Lord 141 Derry v Peek (1889) App Cas 337 (HL) 28n, 69n, 134, 134n ‘digital age’ 171–2, 172n Directors’ Liability Act 1890 69, 69n, 70 disclosure, directors’ obligations 137–8, 150n discourse analysis 88 dishonesty, as criterion for fraud 27–8 Disraeli, Benjamin 126, 130 Dupree, Bonamy 208n Eastwood, David 110n, 151 ‘economy of deterrence’ 58–9, 60–1, 81–2, 117, 131, 158; impact on ‘respectable’ classes 63; modern commentaries on 161–2; recalibration 173–4, 199 eighteenth century see pre-Victorian era embezzlement 102, 133, 136; criminalisation/penalties 103–5, 167; trials 165–6, 222 Embezzlement Act 1749 104–5 English Joint Stock Companies Bank 201 Enlightenment, ideology of 60, 81n, 139, 174, 181–2 Ernst and Young Esdaile, Edward 85n, 225 Europe, penal systems 227n European Commission 31n European Union: capital markets law 35–6; financial legislation 31 252 Index Evans, David Morier 85–95, 93n, 96, 97–8, 102–3, 107, 108, 108n, 112, 124, 132–3, 148n, 191, 211, 213–14; contrasting of different forms of crime 91–3; extent of influence 88, 95 Factors Act 1889 197 false/misleading statements, making of 33n Financial Conduct Authority (FCA) 30n, 33, 42, 74n financial crime (see also fraud; Victorianera financial crime; ‘white-collar’ crime): activities defined as 157–8; ambivalent attitudes to 5–6, 15, 21, 24, 71, 75–6, 77, 79, 169, 171–2, 214–15; ‘base elements’ 77–8; civil/administrative sanctions 35–7, 41; civil-criminal duality 36–7, 56–7; classification 97; criminal enforcement, importance of 38–41; definitions 32–4, 37–8, 77–8; detectability 98–9, 99n; early history 1, 15–16, 45–6, 49, 55, 78–9, 100 (see also Victorian-era financial crime); ease of concealment 98–9; ‘invisibility’ 98, 171, 211; as ‘less criminal’ than other forms 5–6, 18, 78, 90–1, 171–2; and the modern State 150–6; pan-European movement on 35–6; perpetrators’ self-image 78; social attitudes to 5–6, 21–4, 41, 42–3; social harm caused by 74–5, 78–9, 152–3, 160–1, 170–1, 186–7, 199–201; as ‘victimless’ 42–3, 74–5 financial law: ineffectuality 18; lack of public confidence in 39 financial misconduct, offence of 7–8, 28, 33, 229–30; Government support for 8; liability criteria 143 Financial Services Act 1986 30, 33 Financial Services Act 2010 32n Financial Services Act 2012 5, 14, 30, 32nn, 33, 39–40, 112n, 229 Financial Services and Markets Act (FSMA) 2000 30–4, 35; balance of compliance and regulatory function 31n Financial Services and Markets Act (FSMA) 2000 (Market Abuse) regulations 2003 35–6 Financial Services Authority (FSA) 38–40, 41–2, 74n; disbandment 5, 30; jurisdiction 35; objectives 14, 31–2, 74; responsibilities 31 Financial Services (Banking Reform) Act 2013 6–7, 8, 40, 143–4, 157, 229 Fitzwilliam, Earl 126 Foley v Hill (1848) HL Cas 28 105, 143, 145 forgery 105–6, 117–18; penalties for 86, 105; revision of law on 132–3 Formoy, R.R 115n Foss v Harbottle (1843) Hare, 461 195, 196 franchise, extension of (1832) 109 fraud: (alleged) incitements to 141; annual costs 73–4; changing nature 115–16; criminalisation 55, 69; Law Commission Report (2002) 27, 28; legislation aimed at 25–6, 138–9; non-overt nature 97; pre-Victorian history 49, 102–8; range of meanings 28–9, 32; remedies 83–4; revision of law on 132–3; rising incidence (19th century) 83; role of intent 172n; as single offence 27–8; technological developments 24–5; trials 1, 10, 15–16, 26–7, 160–1 (see also names of specific cases); variety of scope/perpetrators 89 Fraud Act 2006 25, 26, 27–8, 32n; significance for UK law 28, 29–30 Fraud Squad, establishment of (1946) 96 Fraud Trials Committee 26 Fraudulent Trustees Act 1857 see Punishment of Frauds Act Freshfield, Charles 198 Freshfields, Messrs (later Freshfields Bruckhaus Deringer) 198, 198n, 205 Friedrichs, D.O 16n, 21, 30, 43, 75, 79, 80, 90, 152–3, 155, 159, 172, 213 Gierke, Otto von 120n Gladstone, W.E 118, 137–8 global financial crisis (2007–8) 1–6, 11, 52, 133–4, 152; UK response 4–6; unprecedentedness of situation 16–17 globalisation, impact on UK law 30–1 Globe Assurance Company 91–2 Gloucester Penitentiary 131n Glyn, George Carr 123n Godfrey, Barry 17, 19–20, 46, 51–2, 88 Goldman Sachs Gordon, Cosmo William 190, 190n, 205, 218 Goring, Charles, Dr 96–9 Great Reform Act 1832 109, 147 Green, S.P 176n Green, Stuart 23, 28 Griffiths, Rev Dr 205–6 ‘Guinness Four’ 64n Index Gurney, John 201–2, 203 Haldane, Andrew 13 Hall, Jerome 99 Hancock, Matthew, MP Hay, Douglas 58 Hegel, Friedrich 14 Henriques, U.R.Q 178n ‘heroism,’ as characteristic of perpetrators 90, 93–4, 93n, 214, 221–2 Herschell, Lord 145n ‘high art’ crime 85–6, 89, 91, 94–5, 102, 108, 229–30, 232; contrasted with other forms 92–3, 226; courage required for 93n; high incidence 212 Hilton, Boyd 64, 93n, 94n, 216 history, legal/financial 9–13; differing views of 11, 16–17; lessons to be learned from 13–17; studies of 18–21 Hoffmann J (later Lord) 196, 215n Holford Committee 131n house arrest 227–8 House of Lords, role in Victorian government 146–7 Howard, John 99n, 131, 131n, 182 Hudson, George ‘The Railway King’ 93n, 113–14, 123nn, 126, 136–7, 149n Ibbetson, David 11 individualism, Victorian cult of 110–11, 179 individuals: increased liability 4–5; (lack of) criminal responsibility ‘information age’ 172n ‘ingenious crime’ 61, 63 insider dealing 32n, 33, 34n, 74–5; criminalisation 36n; jurisdiction over 35 insolvency, impact of 207n intent, as criterion for fraud 172n International Monetary Fund (IMF) 36–8 Ireland, Paddy 67 Irvine, Lord 29 ‘Jekyll and Hyde’ mentality 93 Jessel, Sir George MR 131, 140–1, 144, 160, 174n, 215 Johnson, Paul 57n, 65, 116n joint-stock companies 188; approval/ support 116, 116n; formation 115n, 116–17; outlawing 106–7; studies 65, 68 Joint Stock Companies Act 1844 118, 124, 137–8, 148, 149–50, 174 253 Joint Stock Companies Act 1856 142 Joint Stock Companies Winding-Up Act 1848 148n Jones, David 61–2, 63n, 96 judges 190–6 (see also R v Strahan; Royal British Bank; names of judges); ignorance of commercial law 193–6, 197–200, 204; knowledge of criminal law 199; remarks on defendants 177, 181–2, 185–6, 190–2, 202–3; remarks on juries 194–5, 200; social/political alignment 201, 202–3 juries: qualities of 194–5, 200; ‘special’ 195, 195n Juries Act 1879 195n Kelley, Augustus M 127n Kelly, Sir Fitzroy 198 Kennedy, Richard Hartley 225 Kershaw, David 44–5 King, Mervyn 4, 5n, 13 King, Peter 19, 51 Kostal, Rande W 65–6, 108n, 109, 119n, 122, 128 Larceny Act 1861 147 law, relationship with social custom 18, 139–40, 160 Law Commission 15n, 40–1, 158; Criminal Liability in Regulatory Contexts (Consultation Paper, 2010) 40; Fraud and Deception (Consultation Paper, 1999) 26, 29, 30, 39; Fraud Report (2002) 27, 28 Lawrance ‘Long John’ J 197–8, 197n Lehman Brothers Lester, V Markham 64 Levi, Michael 25, 45–6, 57n, 171n Lewis, Sir George Henry 201, 202 ‘lexicon’ (of financial crime) 18, 21–2, 71, 79; 19th-century creation/development 72–3, 100, 101, 147, 172–3, 211, 213; 21st-century neologisms 148; ambivalence/ambiguities 128, 141, 157; search for 45–6, 176 liability, criminal, consequences of 45 (see also strict liability) Libor (London Interbank Offered Rate), fixing scandal (2012) 3–4, 14, 39–40 limited liability, principle of 118–19 Limited Liability Act 1855 118, 141, 149–50, 206 Linklaters, Messrs 3, 206, 207 254 Index Lobban, Michael 134n Locker, John P 17, 19–20, 46, 51–2, 66, 67, 68, 88 London Stock Exchange 212 Mackay, Charles 107 Macleod, Henry Dunning 181, 183–4 Maitland, F.W 120n market abuse, offence of 33, 37–8, 74–5 Market Abuse Directive 2003 34n, 35–6 Marxist scholarship 58 Mathew J 197 Maxwell, Kevin/Ian 26 Maxwell, Robert 106 McDermott, Tracey 42 McGowen, Randall 68, 105–6 Means, Gardiner 135n, 150 mens rea, doctrine of 158 Merchant’s Bank 203 middle classes, importance in Victorian society 109–11 misappropriation: as felony 103–4; revision of law on 132–3 Monteagle, Lord 145n Morrison, James, MP 123, 123n motivations (alleged) 30, 164; businessoriented 221–3; investigations into 90–2; personal enrichment/improved social status 91–2, 181, 217–18 Napoleonic Wars (1800–15) 60 National Fraud Authority 25–6, 73–5, 171n Neave, Sheffield 208n Nelken, David 23, 75, 80, 155 ‘new police’: creation 58, 81, 96n, 158; priorities 60, 83–4; relations with community 63, 86–7 Nicholson, Donald 165n nineteenth century see pre-Victorian era; Victorian era Norrie, Alan 66–7 Northern Rock 14n; Treasury Committee Report 13, 15 ‘offence,’ defined 32n O’Neill v Phillips [1999] UKHL 24 196n Osborne, George Overend, Gurney & Co 13, 200–4, 206, 218; City perceptions of 208; judge’s criticisms of case against 201, 202–3 Overstone, Lord 113n, 145n ‘overtrading’ 92, 166–7 Parliamentary Commission on Banking Standards (PCBS) 4; 2013 Report 6–7; Governmental response 7n, Paul, Sir George Onesephorous 131, 131n, 182 Paul, Sir John Dean 84n, 89n, 103n, 144, 153, 165–6, 183, 205 Peel, Sir Robert 63, 81, 105, 108, 123–4 Perkin, Harold 55–6, 61, 63, 64–5, 121n Pettet, Ben 194 Phillips, David 58 physical punishment, use of 59 (see also capital punishment) Polanyi, Karl 111n, 134n, 150, 215n policing, nineteenth-century reforms 63, 81, 178 (see also ‘new police’; Royal Commission on the Constabulary Force) Pollins, Harold 108n Pollock CB 181–2, 186, 190–2, 214–15, 218, 224 Poor Law Amendment Act 1834 130n Potter, Lewis 225 pre-Victorian era (see also South Sea Bubble): history of fraud/financial crime 102–3, 106–8, 117–18; increased criminal opportunities 103; penal code 58–60 (see also ‘Bloody Code’; ‘economy of deterrence’) prison: internal social divisions 227–8; (supposed) dual aims 178, 225n prosecutors, approaches to financial trials 164–5, 177–8, 179–81, 220 Prudential Regulation Authority (PRA) 30n ‘public interest,’ as reason for prosecutions 189–92, 222–4 Public Prosecutor, establishment of office of 129, 132 ‘punishment enough,’ concept of 226–7, 226n Punishment of Frauds Act 1857 9n, 138–9, 140–7, 155; concerns expressed over 144–5; historical significance 147; parliamentary debates on 144–5, 145nn, 192–3; scope 142–3 R v Esdaile and others (1858) IF&F 213 see Royal British Bank, trial of directors R v Ghosh [1982] EWCA Crim 28 R v McQuiod [2010] Cr App R (S) 43 39 R v Rigby, Bailey and Rowley (2005) 33n Index R v Strahan, Paul and Bates (1855) 84n, 89n, 103, 103n, 144, 207, 212, 222; defence strategies 167, 183; initiation 205–6; judge’s remarks 166, 168, 180– 1, 186, 202, 203, 204, 209; prosecutor’s approach 166, 177–8, 177n, 179–80; sentences 153, 227 railway boom (1840s) 108–9, 118–27, 135, 136–7; attraction of investment 119–20, 122–3; boardroom tactics 112–13; ‘bubble’ companies 109, 111–12; causes 109; concerns over company management 126; exposure of illegalities 113–14, 128–9; financial scale 120–1; instability/crisis resulting from 87–8, 109, 111–13, 148, 148n; opportunities for dishonesty 109, 126; prosecution of offenders 113–14; recruitment of high-profile investors 122–3 Railway Companies Dissolution Act 1846 123, 123n, 150n railways (see also railway boom): government support 123–5; histories 95n, 111, 120n, 121–2; incorporation of companies 119–20, 124, 125–6; public confidence in 125–6; ‘railway law’ 65–6, 121–2, 138; State acquisition 123n Railways Regulation Act 1846 138 Re City Equitable Fire Insurance Co., 1925, Ch 407 194 Re Welfab Engineers Ltd [1990] BCLC 833 207n recklessness, as criterion for criminal liability 7–8, 44–5, 45n, 157 Reed, Malcolm 108n Reform Act 1867 147 Regulation of Railways Act 1844 123 Reinhart, Carmen 14 Representation of the People Act 1884 147 ‘respectability,’ Victorian notions of 174–5; ‘by association’ 217–18; conduct unbecoming to 178–9, 182–3; dissociation from criminality 184; ‘hidden affinities’ with criminality 184, 188, 210 ‘ring-fencing,’ recommendations for 5n risk-taking: recognition of need for 144 risk-taking, recognition of need for 144, 171n Robb, George 54–7, 56n, 58, 61, 63, 64, 73 Robbins, Michael 90 255 Robson, W.J 91–2, 182, 217 Rodwell, Mr 208n Rogoff, Kenneth 14 Rome, Treaty of see Treaty of Rome Rose v Bank of Australasia [1894] A.C 687 197–8, 197n Roskill, Lord 26, 29, 43, 74n, 98 Rosoff, Stephen M 18, 22, 48, 99, 157, 211 Rowan, Sir Charles 81 Royal Bank of Scotland Royal British Bank, trial of directors (1858) 89n, 123n, 147, 168–9, 181, 212, 222; defence strategies 167, 183; difficulties attendant on 154–5; financial/legal repercussions 206–7; groundbreaking nature 70, 156, 165; ‘infamy’ of crime 185–6, 196; initiation 205; judge’s remarks 85n, 114n, 140, 168, 181, 185–6, 194–5, 196, 200, 203, 219, 220–1, 225; jury 194–5, 200; prosecutor’s approach 180, 202; reasons for bringing prosecution 144, 153–4; sentences 224–6; significance for contemporary law-making 146, 152 Royal Commission on the Constabulary Force, 1839 Report 81–4, 85, 164; commentary on financial crime 83–4; focus on ‘criminal classes’ 82–3, 95–6 Ryder, Nic Sadlier, John 93n, 154 Sale of Goods Act 1893 197 Salomon v A Salomon & Co Ltd [1897] AC 22 69, 69n, 70, 117, 134, 134n Scotland, law of 172n Searle, G.R 57n, 64–5 Securities Exchange Commission (SEC, US) 34–5 securities regulation 34–5 Select Committee on Commercial Distress (1857–8) 151–3, 156, 206, 207 self-determination, as principle of Victorian society 110–11 sentencing 222–3, 224–9 (see also ‘Bloody Code’; ‘economy of deterrence’); (alleged) social bias 226–9; (comparative) leniency 224–8; imposition of maximum sentences 153, 181, 191–2, 224, 227; modern concerns over 226–7, 228–9; ‘punishment enough,’ concept of 226–7, 226n; studies 50 Serious Fraud Office 26–7; establishment 26–7, 26n 256 Index Sewell, William, JR 20 Shapiro, Susan 23, 176nn shareholders: ‘primacy’ model 150n, 207n; prosecutions brought by 204 Shaw-Lefevre, Charles 81 Simmons, Jack 126 Simpson, Sally S 23, 78, 99 Sinclair v Stewart and others (1879) R 517 see City of Glasgow Bank, trial of directors Smiles, Samuel 110n ‘social contract’ 216 South Sea Bubble (1719–20) 48, 102–3, 106–7, 115–16, 138; aftermath 116n; railway boom compared with 118–27 Special Commissioners for Income Tax v Pemsel [1891] AC 531 142n Standing Counsel, appointment of 198–9 Standing Order Regulations 1844 125, 126 Stapleton, John 123n, 181, 203 State, emergence of moden concept of 129–30 Stebbings, Chantal 67 Stephen, Sir James Fitzjames 28 Stephenson, George 121 Stephenson, Robert 121 Stewart, John 70n, 156n, 184 stock manipulation 37–8 Stokes, Mary 67 Storch, Robert 58 Strahan, William 84n, 89n, 103n, 144, 153, 165–6, 177, 207, 209 (see also R v Strahan); defence 167, 167n, 183 strict liability 45, 140n Stronach, Robert 220, 225 Styles, John 68, 104–5, 135, 136, 166, 167, 167n Sugarman, David 67 Sutherland, E.H 17, 20, 22–3, 41, 43–4, 60, 72, 75, 76–80, 80n, 85, 88, 90, 94, 97, 139–40, 155, 158, 213; criticisms 76–7, 76n, 79–80, 100, 161n, 176n; influence on later writers 99, 99n; influences on 99–100 Symington, Jamie 42–3, 52n systemic risk, attempts to reduce Tappan, Paul 79–80, 90, 94 Taylor, James 55, 57n, 64, 65, 68–72, 73, 115, 117, 139, 143, 147, 158 Taylor, William 184 technology, role in criminal/legal developments 24–6, 171–2 Theft Act 1968 27–8, 27n Thesiger, Sir Frederick 180, 183, 202 Thompson, F.M.L 163n Tipperary Bank 154, 170 Tomasic, Roman 2, 6, 14, 52n ‘too big to fail’ doctrine 148 tort, Victorian law of 9n Tosh, John 10–11, 16–17, 19, 53, 54–5, 230, 231–2 Treasury Consultation (July 2012) 4–5, 7–8, 143–4 Treaty of Rome 1957 31 Trollope, Anthony, The Way We Live Now 49 trust, abuse of 103, 167, 180, 227 trustees: criminal liability 105; innocent, failure to protect 144–5; regulation 135, 136 Tucker, Paul 13 tulpenmanie (Holland, 17th century) 102, 107–8 ‘twin peaks’ regulatory structure 5, 30 Tyrie, Andrew, MP 6, United States: corporate law 150n; impact of global crisis 2–3; penal system 227n; securities regulation 34–5; types of law 80n Veeder, V.V 197n Vickers recommendations 5n Victorian era 46–7, 48–9; alcohol consumption 59–60; attitudes to success/ failure 221–2; bank runs 13, 222; business culture 7, 101–2, 163–6; company formations 116–17; cult of individualism 110–11, 179; enterprise economy 135–6, 188, 193, 215–16; governmental system 146–7; increased commercial complexity 211–12; (lack of) modern engagement with 48; law-making agendas 173–4; law of tort 9n; legacy for modern age 228–32; modern studies 10–13; orientation of criminal law 9, 9n, 12–13, 158–9; prison regimes 131, 131n; property, significance of 179; rise of middle classes 109–11, 162–3, 163n, 179; role of State 129–30; Royal Commissions 151–3; social reform legislation 12–13, 109, 130n, 147; temporal/ideological distance from present 230–2 Victorian-era criminology: 20th/21stcentury studies 61–6; commentary on pre-Victorian frauds 102–3, 106–8; Index focus on lower classes 60–2, 82–3; influence on later attitudes 101–2 Victorian-era financial crime (see also defence strategies; fraud; ‘high art’ crime; judges; motivations; prosecutors; railway boom; sentencing): absence from statistics 211; arguments for non-criminality 193; calls for heavier penalties 90, 91–2, 170–1; as cause of social harm 160–1, 170–1, 186–7, 199–201; changing attitudes to 70–2, 85–9, 93–5, 114–15, 118, 166–7, 181–3, 210–11, 222–3; class-based distinctions 91–2, 181–2, 183–4; classification 97, 97n, 188–9; creation of new offences 167–8; ‘criminalisation’ 65–6, 69, 71, 90, 103–4, 114–15, 118, 134–9, 140–1, 188–9; degree of sympathy/admiration for perpetrators 62, 83, 90, 93, 93n, 97–8, 214; denunciations 185–6, 202, 204, 209; ‘discovery’ 46, 70, 72, 100, 103, 127, 132–3, 157–8, 161, 210; distinguished from ‘common’ crimes 83, 92–3, 97, 159, 164, 177–8, 226, 227, 228; exposures 72; impact on perceptions of crime in general 139–43, 169–70, 175–6; impact on society 78–9; increased attention paid to 86–7, 97–8, 98–9, 100; initiation of prosecutions 204–7; as ‘isolated incident’ 97–8; motivations 92; nonpenal remedies 84; penalties 103–4; (proposed) legal remedies 83–4, 89, 257 159–60; prosecution of high-profile offenders 113–14, 170, 215; reforms to legal system 129–34; responses to 113–18, 128–56, 159–66, 213, 229–30; revisiting of existing offences 132–3; scale 211; social consequences for perpetrators 223–4, 227; undiscovered 210–11, 213–14 violent crime, financial crime distinguished from 164 Watts, Walter 91–2, 182, 217 Webb, Julian 165n Weiss, Barbara 64 West Mercia Safetywear Ltd v Dodd [1988] BCLC 250 CA 207n Wheeler, Sally 67 Wheeler, Stanton 50, 52, 97, 99 ‘white-collar’ crime (see also financial crime; fraud): (attempted) definitions 22–3; coinage of term 85, 97; length of history 45–6, 49, 55, 100; as less serious than other crimes 18–19, 20–1, 29; ‘special nature’ 21–4, 41, 43–5, 75–6, 79; studies 49–55, 75–6, 99–100 Whitman, J.Q 227, 227N Widlake, Brian 33 Wiener, Martin 61–2, 161, 227–8 Wilson, Sarah 68n, 115nn winding up, legislation relating to 148–9 World Bank 36 Wright, Rosalind 27n, 171n Wynford, Lord 141 ... Origins of Modern Financial Crime Historical foundations and current problems in Britain Sarah Wilson The Origins of Modern Financial Crime Historical foundations and current problems in Britain Sarah... blank The Origins of Modern Financial Crime The recent global financial crisis has been characterised as a turning point in the way we respond to financial crime Focusing on this change and crime. .. working in the field of financial crime, practitioner or academic lawyer Financial crime has contributed to the global financial crisis and remains endemic in some business circles In explaining