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4 J. Fin. Crime 7 (1996-1997)

handle is hein.journals/jfc4 and id is 1 raw text is: ANALYSIS Deviant Legitimacy - A Theory of Financial Crime Rowan Bosworth-Davies INTRODUCTION In this article, the author begins by restating the theory of criminogenesis which he first examined in an earlier article that dealt with the activities of the futures and derivatives markets. He then extends the theory of criminal potential by exam- ining the conduct of those who work within the Life Assurance and Pensions industry, with par- ticular emphasis on the marketing of personal pen- sions, and attempts to show that such activity can properly be defined as 'organised crime'. THE MEANING OF CRIMINOGENESIS 'It was a filthy profession, but the money was addicting, and one addiction led to another, and they were all going to hell.' In August 1994, the author published an article examining the theory of criminogenesis,2 by which was meant the propensity for defined groups of individuals to behave in a way that, while not nec- essarily being immediately criminal in itself, possessed all the requisite characteristics to become criminal, by legal definition, if the prevailing cir- cumstances in which such behaviour was practised changed. For those who will not have read the earlier paper, the main thrust of the argument is paraphrased below. When talking about the pre- vailing cultural environment in which the futures market traders and practitioners operated, it was asserted: 'Psychologically, many of these men and women can be defined as being regulatorily resistant. Theirs is a primarily deviant, norm-evasive, crimi- nogenic culture, not much given to the willing acceptance of regulatory control. Such an uncomprising statement should not be immedia- tely interpreted to mean that these practitioners are committing wholesale overt criminal acts. It simply means that their risk-taking culture, itself the antithesis of the traditional perception of the risk- reduction function of these markets; coupled with the highly competitive environment within which they work, whose new traditions give all the impression of flouting traditional, old market norms; predispose them to break the rules more readily than practitioners in other commercial sec- tors. These are the traders to whom the com- pliance officer is generally seen as the business prevention officer and the traders tend to view each new regulatory notice as an irritating incon- venience standing in the way of increasingly inno- vative trading. Each new regulatory requirement is looked upon as a challenge to the ingenuity of the traders, and competitions are held by dealers to see who can get round the controls undiscovered, and in the most profitable manner. In his article, Mavericks at the Casino: Legal and Ethical Inde- terminancy in the Financial Markets,3 Chris- topher Stanley identifies the development of this new phenomenon within the previously ordered environment of the City of London. 'The New City reflected the ideological aspira- tions of a system of political administrations which disrupted the post-war consensus of relations between polity and economy. It also reflected the Casino or Disorganisation of Capitalism: 'an inter- national financial system in which gamblers in the casino have got out of hand.' The New City was international, technological and subscribed to the Enterprise Culture ethos which placed individual success and self-reliance as the primary indicators of excellence. The structural changes which the Government introduced, in terms of trading prac- tice and regulation, operated with the new finan- cial products and markets to ensure that the particular elite of the Old City, which was per- ceived as a dangerously destabilising hegemonic © Emerald Backfiles 2007

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