[PASSED] Concerning Financial Fraud

[Holy Chaos]

First of all let's get to the definition, "as the procurement of fiscal and/or material assets." This means the buyer and seller. A woman and her broker. Aside from penny stock sellers and PONZI scheemes, this means that almost all forms of financial deception in order to keep the stock price high is not covered by this resolution, since it only concerns the buyer and seller. If I own 500 shares of XYZ and the CEO makes false statements that keeps me from selling XYZ and it becomes bankrupt the next day, I'm not covered by this resolution. So we solve 1% of the Financial Fraud problems? Penguin Poop, I say!

I wholeheartedly disagree with this assessment. It is fairly easy to argue that the CEO in your example made money based on a deception. By keeping the stock price of XYZ from plummeting, the CEO continues making a salary for an extra day, which is a fiscal asset. He also is able to receive the material benefits of his office, company cars, and other anemities of XYZ for the day. Under Section 1's definition, he has committed financial fraud. The definition of financial fraud is purposefully a little general in order to allow each country to interpret it how they must based on their economy and society, which is the appropriate way to deal with legislation on an international level.

[Wu Wei Shan]

So we can conclude that the clause in question is null and void and doesn't apply to anything. Obviously you "meant" for it to say member-states, but the author's intent doesn't come into play. It says member-state, which renders the clause nonsensical and therefore unenforceable.

You're obviously not understanding my argument, because you're jumping from unfounded point to unfounded point. The clause, while technically non-syntactical, could be read in the third person singular, as opposed to the third person plural. Granted, if you'd like to play the "I don't like this resolution, so I'll make silly arguments! Derp!" card, then that's fine by me; I'll even get a legality ruling by the secretariats to ensure the legality. However, I will not personally entertain this argument any further.

Yours in agitation,

It's apparent he created that nation yesterday for the sole purpose of derp.

[Lemmingtopias]

The way I see it, all nations party to this discussion agree with the spirit of Ossitania's Resolution. However, there are at least three separate and valid objections to the wording used in the resolution:

1. Overbroad definition of "financial fraud."
4.(a) Typographical error.
4.(b) Promises compensation at the risk of bankrupting small nations/transferring burden of fraud to taxpayers

I think it's fair to ask for a rewrite of this resolution to address these issues.

The recommendations Panoptical offers to remedy these problems are:

1. Allow jurisdictions to determine their own definitions of fraud; or adopt a well-established common-law definition of fraud

4.(a) Add an s to "Member-State"

4.(b) Do not require jurisdictions to compensate victims if the damages are not recoverable from the perpetrator of fraud within a reasonable period of time (that is to say, do not require jurisdictions to pay out of pocket or to impose debt slavery on the perpetrator)

I believe that if the Resolution were rewritten to include these changes, all objections to the matter at hand would cease immediately. There is no reason to rush an imperfect Resolution through the Assembly when fixing it is such a simple matter.

I agree entirely with the honourable ambassador from Panoptical.

[Shadowlandistan]

Shadowlandistan has voted FOR this resolution based on the fact that protecting individuals from any form of financial fraud benefits the security of the world market place.

[Lemmingtopias]

I don't see how it affects the world market. If anything, it will be a heavy hit to the insurance industry of many WA Nations (Which is not a bad thing in my opinion..pesky insurance suits)

[Holy Chaos]

I don't see how it affects the world market. If anything, it will be a heavy hit to the insurance industry of many WA Nations (Which is not a bad thing in my opinion..pesky insurance suits)

Doesn't really affect them either, since the perpetrator is the one to pay the victims, not insurance companies. Looking at the category of this proposal, I would actually think that it fits in Social Justice more than Free Trade, since we're restricting fraudulent types of trading that are inherently unfair. Doesn't really matter in my opinion, though.

[Robanistania]

Thank you Ossitania for beginning to answer the question surrounding Clause #4, as I am in agreement with the spirit of this resolution. I am still somewhat concerned about those rare cases where the fraud is so huge that it would not be feasible for the fraudster to ever pay back through any combination of the three options presented.

Now, I agree that the three options would work well in most cases of smaller fraud, but imagine a fraud that is hundreds of millions or billions of dollars. Some smaller governments (I'm thinking of governments of small nations or of nations who choose to have small governments) may not be able to back a loan to the fraudster. Moreover, if the loan is for many millions of dollars, would it be reasonable to assume the fraudster would pay it off before the fraudster dies? Likely not, which means the burden to repay the victim ends up on the backs of whom? It would seem the answer is either the taxpayer or the insurance industry. Or is the need for repayment simply written-off once the fraudster passes away?

I would have really preferred to see some kind of an option to set an upper limit for compensation because, again, I am concerned that one particularly fraudulent individual could hijack a nation's treasury or insurance industry for many years due to the need to "ensure that all victims of fraud shall receive compensation for their loss equal to or greater than the value of the loss and that this compensation shall be derived from the fiscal and/or material assets of the perpetrator of the act of financial fraud which resulted in the loss."

I look forward to clarification on this matter.

If the resolution stipulates that the compensation be derived from the estate of the fraudulent individual, then it shall be derived solely from there. If other parties wish to consent to aid the fraudulent individual in paying the debt, then they may do so, however that is their choice and it is not stipulated by the resolution. If the estate is insufficient to pay the compensation at the time of conviction, then all parties involved are free to work out a deal amongst themselves (such as the solutions I suggested earlier) in order to pay the compensation some other way. If the fraudulent individual dies before the compensation can be paid, then their estate ceases to exist and no further compensation may be derived from it, as nothing which exists can come from that which does not exist. That may not satisfy the victims completely, but, as you say, there is no sense in bankrupting nations or industries based on the crimes of a single person.

We can only do what is reasonable and, to be honest, setting an arbitrary ceiling on compensation risks as much if not more injustice, as the number would either be entirely arbitrary (if we set a fixed sum) or not necessarily able to avoid this problem in the first place (if we set it as a percentage of the loss or the fraudster's estate). In the first case, let's say we set it at $200, 000. Well, that much money isn't going to be much use to a company on the verge of collapse after losing several million. In the second case, let's say we set it at 10% of the loss or 10% of the fraudster's estate. The latter case obviously could easily result in no compensation if the fraudster has gone bankrupt and the former case could still result in an unrepayable debt if the loss was high enough. Either way, the possibility of not being fairly compensated remains. The current stipulation, I believe, creates the largest possibility of being fairly compensated.

Ossitania thank you for taking the time to answer my question. I feel much more confident that victims will not have recourse to sue the state or insurance companies if and when they do not receive full compensation because the fraudster no longer has the funds. Barring that, we will approach member-state for restitution.

On a matter of principle, I am not sure that a ceiling on compensation would be just as or more unjust. I believe the victim has some responsibility in this matter. They are in control of their money. It is up to them to do a bit of due diligence to understand the risks involved in various investment options. If they choose a higher risk option (usually with promises of higher rewards), then they need to take some responsibility for their decisions. I include in the category of higher risk investments as investing with an individual over a well-established company, a small start-up company over a company with a long track record, etc. In these cases, it would be my preference for some kind of upper limit placed on compensation. It could have even be left up to courts to decide on a case-by-case basis to determine whether a percentage or absolute value is appropriate.

Now having said that, since I agree with the rest of the proposal, I shall be voting in favour of this resolution.

[Cowardly Pacifists]

If it pleases the member-nations, I would like to discuss section 4 of this resolution:

"4. Member-state shall ensure that all victims of fraud shall receive compensation for their loss equal to or greater than the value of the loss and that this compensation shall be derived from the fiscal and/or material assets of the perpetrator of the act of financial fraud which resulted in the loss,"

This provision is the most burdensome on the members-states, requiring them to provide specific enforcement and remedial services in cases of financial fraud. I read it to include two separate mandates that are related, but not necessarily integral, to one another.

The first - "Member-state[s] shall ensure that all victims of fraud shall receive compensation for their loss equal to or greater than the value of the loss" - requires that nations provide compensation for victims of fraud. More specifically, it requires member-states provide compensation at least equal to the value of the loss. Unfortunately, the author has not seen fit to define "financial loss," so I assume this will be for individual nations to define for themselves. But I am sure the members can agree that financial loss means at least the value directly and maliciously taken by the wrongdoer perpetrating the fraud. In at least some cases, the clause requires member-states provide "greater than the value of the loss." Presumably, the author means lost profits, punitive damages, interest, and/or some other consequential loss related to the fraud above and beyond the fraud itself.

The second clause - "and that this compensation shall be derived from the fiscal and/or material assets of the perpetrator of the act of financial fraud which resulted in the loss" - requires that compensation come primarily from the coffers of the wrongdoer. But here the resolution creates an unfortunate and critical ambiguity: What happens in cases where the assets of the wrongdoer are insufficient to provide compensation at least equal to the value of the loss? Such scenarios are not hard to imagine: the wrongdoer may have hidden the assets or destroyed them. He may have fled outside of national and international jurisdictions so that law enforcement cannot reach him. For example, if an otherwise poor swindler fraudulently acquires $100 and buys a $5 sandwich for lunch, he will have only $95 left by dinnertime. This amount will not be enough to compensate the victim for the amount of the fraud, leaving the victim $5 short of the amount necessary to comply with the minimum compensation language in the first clause.

This raises an interesting question about the effect of the two clauses that I would like the international community to address: Where the assets of the wrongdoer are insufficient to provide at least the value of the loss to the victim, is it the obligation of member-states to make up the difference? In other words, does section 4 require the people of a nation to use tax money to compensate victims of financial fraud if the wrongdoer is unable to provide at least minimum compensation (that is, compensation "equal to or greater than the value of the loss"). I feel like far fewer nations will approve of this resolution if it requires them to pay-off victims of financial fraud from the national treasury anytime the wrongdoer has skipped town.

It may be that the two clauses must be read together, and that member-states are required to provide compensation "equal to or greater than the value of the loss" only up to the amount recoverable "from the fiscal and/or material assets of the perpetrator." But this is not how section 4 is worded, and it's proper interpretation is not immediately clear. I would love to hear what other members think about the effect of this section.

[Cowardly Pacifists]

I see that my concerns were addressed in this forum while I was still drafting my post. Thank you for the clarification.

[Lemmingtopias]

Doesn't really affect them either, since the perpetrator is the one to pay the victims, not insurance companies.

Precisely, they will have to reduce their insurance fees due to the lower risk on policies which currently include fraud.

[Nastasia Banya]

My nations is against proposal. This is proposal overall is poorly written and leaves much to be desired.

1. The definition of financial fraud is overly vague and at best a generalization. The language suggest this is pertains only to civil actions and group all types of fraud equally in the same definition.

2. The WORLD ASSEMBLY enacting laws that protect the citizens of NASTASIA BANYA is unnecessary and overreaching. I, the benevolent King of Nastaia Banya rule justly and fairly on all financial matter within our borders. The WORLD ASSEMBLY has no jurisdictional duties to enforce such an act to protect the individuals of my nation. Neither should the state be responsible for compensation regarding private contracts no matter how long a repayment plan is agreed to.

I believe the honorable Cowardly Pacifists point out the various flaws of implementation of section 4 of this resolution.

Fellow members of the WORLD ASSEMBLY should vote against this proposal.

[Connopolis]

I was unsure what to think about this, so I scorinated it using the Aram Koopman Rating Sheet:

(Image)
World Assembly Resolution Score Chart
Technical and national sovereignty considerations. To be used once plausible legality has been achieved.

UNIVERSALITY	10 points: The resolution tries to accomplish a goal that all reasonable governments can consider "just" or "worthwhile".	10/10
ADDED VALUE	0 points: The resolution simply replaces actions that would otherwise have been taken by individuals or Member States governments, without realising any added value.	0/15
MICROMANAGEMENT	5 points: The resolution ensures that decisions are taken as closely as possible to the citizen	5/5
LIBERTY	5 points: The resolution does nothing to affect individual liberties either way.	5/10
PROPOSAL CATEGORY	10 points: "International Action": Human Rights, Free Trade, Furtherment of Democracy	10/10
LENGTH	5 points: The resolution is concise and understandable.	5/5
PURPOSE	5 points: The purpose of the resolution is immediately obvious from the title or the preamble, and all provisions of the resolution are in line with this purpose.	5/5
PREAMBLE	5 points: The preamble explains the underlying philosophy of the resolution, and explains why the international community must take action.	5/5
BUREAUCRACY	10 points: The resolution avoids establishing a World Assembly Bureaucracy ("Committee"), or adding to the size of an existing World Assembly bureaucracy.	10/10
COST CONTROL	5 points: Implementing the resolution is expensive, but the costs can be justified by the benefits in a cost/benefit analysis.	5/10
FUNDING METHOD	10 points: Funding is left to Member States OR: the resolution imposes only nominal financial burdens.	10/10
ECONOMIC IMPACT	10 points: The resolution has a positive impact on the economies of Member States, facilitating international trade making it easier to do business, or removing hurdles to economic development.	10/10
NON-MEMBERS	5 points: The resolution does not significantly impact the economic, political or military position of Member States in the world.	5/10
MINORITIES	5 points: The resolution addresses the concerns of minorities, such as non-human nations, nations with odd political systems, or nations of a different technology level.	5/5

By meeting all of the criteria set out in the World Assembly Resolution Score Chart, a total of 120 points can be obtained. This is the "perfect score" that an ideal proposal would get. Imperfect resolutions score less points. Sometimes, a resolution can score 'negative points' on a particular issue. The World Assembly office of the Dutch Democratic Republic of Knootoss strongly advises against submitting resolutions that have unaddressed "red zones".

WA Ambassador Aram Koopman rates the scores thus:

90 points: "Probably a good resolution, though it could use improvement in a few areas. I might endorse it with the proper... monetary inducements."


This government communication has been printed on biodegradable paper. All carbon emissions associated with the creation of this government communication have been off-set with new plantings in Colombia, using the Pink Bunny Tree™ Carbon Offset Scheme, sponsored by the Pink Bunny Cola Corporation and the Global Hell Group. For more information about the Pink Bunny Tree™ Carbon Offset Scheme, consult http://www.futureproof.kn.

"Mr. Koopman, I'll make you a deal," the ancient envoy beckoned. "Closer," he hissed. "Closer! Clos- too close." Dr. Forshaw removed Aram's top-hat, and pressed the base along the side of his mouth, as if to prevent sound from emanating away from his colleague's ears. "How does 15% sound? No questions, and paid wholly in cash."

[Holy Chaos]

My nations is against proposal. This is proposal overall is poorly written and leaves much to be desired.

1. The definition of financial fraud is overly vague and at best a generalization. The language suggest this is pertains only to civil actions and group all types of fraud equally in the same definition.

2. The WORLD ASSEMBLY enacting laws that protect the citizens of NASTASIA BANYA is unnecessary and overreaching. I, the benevolent King of Nastaia Banya rule justly and fairly on all financial matter within our borders. The WORLD ASSEMBLY has no jurisdictional duties to enforce such an act to protect the individuals of my nation. Neither should the state be responsible for compensation regarding private contracts no matter how long a repayment plan is agreed to.

I believe the honorable Cowardly Pacifists point out the various flaws of implementation of section 4 of this resolution.

Fellow members of the WORLD ASSEMBLY should vote against this proposal.

As we've already stated, this resolution is weakly worded enough to allow you to rule your people as you see fit. It is more-or-less a general acknowledgement of the issue of financial fraud to encourage member-states to legislate as they see fit.

Also, your points seem to contradict each other. Would you rather have a broad definition of financial fraud that allows you to interpret things loosely and legislate for yourself, or do you want a more specific definition of financial fraud that makes it more difficult for you to legislate how you would like? You can't ask for a specific definition of financial fraud and a resolution that allows you to do what you would like on this matter at the same time. The two things are basically mutually exclusive.

[Damanucus]

2. The WORLD ASSEMBLY enacting laws that protect the citizens of NASTASIA BANYA is unnecessary and overreaching. I, the benevolent King of Nastaia Banya rule justly and fairly on all financial matter within our borders. The WORLD ASSEMBLY has no jurisdictional duties to enforce such an act to protect the individuals of my nation. Neither should the state be responsible for compensation regarding private contracts no matter how long a repayment plan is agreed to.

And what happens if the fraudulent activity was committed by a national of a foreign country? Without this resolution, they could very easily be protected by another country's laws which allow it to occur. (That said, I again state that I do wish that the resolution allowed for nations to communicate with each other in regards to known operating scams and the like. But alas, we cannot amend.)

Horgen Dush
Representative, Nomadic Peoples of Damanucus

PS: I forgot what I had actually said in an earlier post that I wish had been included in the resolution. If I have got that wrong, please don't flame me; just correct me.

[Nastasia Banya]

My nations is against proposal. This is proposal overall is poorly written and leaves much to be desired.

1. The definition of financial fraud is overly vague and at best a generalization. The language suggest this is pertains only to civil actions and group all types of fraud equally in the same definition.

2. The WORLD ASSEMBLY enacting laws that protect the citizens of NASTASIA BANYA is unnecessary and overreaching. I, the benevolent King of Nastaia Banya rule justly and fairly on all financial matter within our borders. The WORLD ASSEMBLY has no jurisdictional duties to enforce such an act to protect the individuals of my nation. Neither should the state be responsible for compensation regarding private contracts no matter how long a repayment plan is agreed to.

I believe the honorable Cowardly Pacifists point out the various flaws of implementation of section 4 of this resolution.

Fellow members of the WORLD ASSEMBLY should vote against this proposal.

As we've already stated, this resolution is weakly worded enough to allow you to rule your people as you see fit. It is more-or-less a general acknowledgement of the issue of financial fraud to encourage member-states to legislate as they see fit.

Also, your points seem to contradict each other. Would you rather have a broad definition of financial fraud that allows you to interpret things loosely and legislate for yourself, or do you want a more specific definition of financial fraud that makes it more difficult for you to legislate how you would like? You can't ask for a specific definition of financial fraud and a resolution that allows you to do what you would like on this matter at the same time. The two things are basically mutually exclusive.

Honorable Holy Chaos,
To clarify, this resolution provides a broad definition fraud and a unlimited compensation enforceable by international law on a vague notion of what is considered fraud by each member state all way down to individual citizen's interpretation of each member state. This alone will create more problems than it solves in regards to fraud prevention. If the intended purpose of this resolution, as you have stated above, is to allow member-state to legislate as they see fit, then voting against this proposal is the only sane and responsible response.

[Nastasia Banya]

2. The WORLD ASSEMBLY enacting laws that protect the citizens of NASTASIA BANYA is unnecessary and overreaching. I, the benevolent King of Nastaia Banya rule justly and fairly on all financial matter within our borders. The WORLD ASSEMBLY has no jurisdictional duties to enforce such an act to protect the individuals of my nation. Neither should the state be responsible for compensation regarding private contracts no matter how long a repayment plan is agreed to.

And what happens if the fraudulent activity was committed by a national of a foreign country? Without this resolution, they could very easily be protected by another country's laws which allow it to occur. (That said, I again state that I do wish that the resolution allowed for nations to communicate with each other in regards to known operating scams and the like. But alas, we cannot amend.)

Horgen Dush
Representative, Nomadic Peoples of Damanucus

PS: I forgot what I had actually said in an earlier post that I wish had been included in the resolution. If I have got that wrong, please don't flame me; just correct me.

Representative Horgen Dush,
I am not opposed to fraud prevention and enforcement, but I am opposed for the member states to be financially responsible for an individual who chooses to conduct business abroad.

[Holy Chaos]

If the intended purpose of this resolution, as you have stated above, is to allow member-state to legislate as they see fit, then voting against this proposal is the only sane and responsible response.

You misunderstand what I mean. The point of this resolution in general is to get financial fraud and the policy agenda and force member-states to do something to correct it. The loose definitions and clauses, however, are meant to allow those member-states some breathing room to fit their actions to their nation's needs.

[Connopolis]

Omnibus rebuttal concerning the definition:

I didn't think this was necessary, but evidently, it is.

1. "Financial fraud" shall be defined as the procurement of fiscal and/or material assets by deceptive means, either by way of intentional misrepresentation of fact or deliberate and outright statement of false information,

Many have argued that this will force all member-states to ban controversial services, such as fortune-telling, unproven medical experiments, etc. That is blatantly false, and exemplifies that many are only circumspect in their reading of resolutions in search for negative aspects or flaws. Compounded with the underlined segment of clause one, I'd like to introduce you to clause three:

3. Member-states shall take all practical, effective preventative measures, including the creation of domestic laws, in order to eliminate financial fraud,

With all due respect, banning aroma-therapy, or fortune telling is most certainly not a practical, or effective preventative measure. To the contrary, taking such actions are impractical, and ineffective. This clause only mandates that member-states take practical measures against financial fraud. Nowhere does it state that member-states must ban everything that remotely contributes to financial fraud, even if there are unintended consequences involved. Ironically, an older version of this proposal was pulled from quroum in order to add the word practical; to avoid this very situation, no less.

Now, I certainly commend those with an eye for detail, and I wish that many of you would take part in the drafting process, however, I must correct you in this instance, as you're perceptions of the resolution's effects are certainly flawed.

I believe the honorable Cowardly Pacifists point out the various flaws of implementation of section 4 of this resolution.

You know, that might have been a somewhat reasonable argument, but Cowardly Pacifists then retracted his concerns here:

I see that my concerns were addressed in this forum while I was still drafting my post. Thank you for the clarification.

I thank Ossitania, Damanucus, and Holy Chaos for defending the merits of this proposal in my absence.

Yours in putting the lawyers back in their cage,

[North Sabah]

The People's Republic support everything which benefits all side.

[The Bruce]

What I would have liked to have seen in this resolution are sanctions against nations setting themselves up as nations of convenience for fraudsters to operate from, by internet and phone, to freely commit criminal acts in other nations without fear of persecution while they are inside that nation of convenience.

[Lemmingtopias]

After an Emergency Meeting of the Executive Cabinet of the Republic, the Principle Senator announced to the Senate that, in order to comply with Article 4 of the 'Concerning Financial Fraud Resolution', the government had begun a loans programme, lending to the perpetrators of financial fraud whom do not have the fiscal/material assets to cover the losses of the victim.

The Leader of the opposition argued that the government would, in a large amount of cases, would be suffering a loss on unpaid loans as many people will die before settling repayments from larger cases of fraud. He said that those who later find that they cannot afford loan repayments would be tempted to commit further crimes in order to make repayments or would have to refinance the loans.

The Principle Senator simply replied, "Senator, we have no choice."