Fraudulent Schemes in the Financial Market (Financial Pyramids) – Detection and Prevention

Abstract

This contribution deals with fraudulent schemes in the financial market. The main aim of the contribution is to provide main identifying features of fraudulent practices that prove to be a financial pyramid. The author summarizes in one place numerous features that indicate the financial pyramid (Ponzi scheme), especially operating on the financial or capital market. He concludes, the state of play of legislation regarding the features is insufficient. The hypothesis to confirm or disprove is there is no uniform legal provision covering all features of the pyramid scheme in Slovakia, the relevant legislation is limited to the prohibition of certain practices, which a priori may not constitute a pyramid scheme.

Keywords

• ponzi scheme
• financial pyramid
• spontaneous ponzi system
• multilevel marketing pyramid schemes
• features of the pyramid scheme
• prevention tools ex ante/ex post