Si
pubblica, col consenso dell’Autrice e dell’Editore, la traduzione del Capitolo
primo «Исторический анализ развития рынка ценных бумаг и криминальных проявлений в сфере обращения ценных бумаг» della monografia di ELENA VLADIMIROVNA VALLASK, Мошенничество с использованием ценных бумаг: ретроспективный анализ, криминалистическая характеристика и программы расследования, Saint Petersburg, Юридический центр Пресс, 2007, pp. 198. ISBN 978-5-94201-539-8
Indice del volume
Elena Vladimirovna (Vallask) Barkalova
St.
Petersburg Law Institute (branch office)
University
of the Prosecutor's Office of the Russian Federation
Saint
Petersburg
Historical analysis of development of securities
market and criminal acts in the field of securities circulation
Contents: – 1. Development of securities market and analysis of criminal acts in the
sphere of securities circulation in Pre-revolutionary and Soviet period of the
Russian history. – 2. The current state of the securities market and the criminogenic
situation in the sphere of securities circulation in Russia. – Abstract.
The appearance of securities in
economic circulation was inevitably accompanied by the emergence of criminal
encroachments using these financial instruments. Therefore, the study of criminality
in the securities market as a phenomenon of reality in the historical aspect is
impossible without studying the processes of formation and development of the
securities market itself[1].
Legal historians have not developed
a consensus on the period of securities appearance in the trade turnover of
Pre-revolutionary Russia. It is assumed that the prototype of the security was
mortgage bond, which referred "... to strictly formal documents,
resembling Roman literal contracts, the execution of which is conditioned on
the possession of the document and its return to the debtor"[2].
One of the first securities to
appear in civil circulation is a promissory note[3], the introduction of which is not directly indicated either in
regulatory legal acts or in special literature until the end of the XVII
century. I. Tabashnikov assumed an earlier appearance in circulation of
promissory notes in Russia, arguing his point of view that Novgorod Velikiy was
part of the Hanseatic League[4], in whose member cities the
promissory note was used to transfer money when paying for transactions for the
purchase and sale of goods, performance of works and provision of services,
presumably starting from the XII century. Accepting money in one place,
professional money changers, by writing letters called bills of exchange,
entered into communication with their colleagues in other cities, and thus, the
client could receive money at the place of destination he needed.
In the XV century, the promissory
note began to be used to formalize a loan agreement. A significant obstacle to
the use of a bill of exchange in trade (initially, the possibility of acquiring
it existed only at fairs when making settlements between merchants) was soon
overcome with the advent of an endorsement. In the XVI century, exchanges
appeared - special premises for transactions between merchants, and a little
earlier in Italy – banks as special organizations engaged in a number of
transactions. However, the historian S.M. Barats, who is an adherent of the
theory of the later formation of the Russian bill turnover, noted in his
monograph that "ancient Russia stood outside the movement that gave rise
to a bill"[5].
The formation and state regulation
of the securities market began during the reign of Peter I. In Russia, bills of
exchange began to be actively used after the publication of a number of decrees
on the transfer of state money using bills of exchange for the maintenance of
the Russian army abroad. In 1729, during the reign of Peter II, the Bill of
Exchange Charter[6] was adopted, which was the first
document in Russia that regulated in such detail the issues of the form and
details of the bill, the rules for its compilation and circulation. In addition
to trade relations, a promissory note has become actively used in civil
circulation when processing debt obligations of individuals. In this regard,
abuses with it became widespread, the most socially dangerous of which was
embezzlement by fraud using a bill of exchange.
The
following methods of bill fraud were known to pre-revolutionary criminal
practice:
1.
Issuance of unsecured promissory notes[7].
2.
Making transfer inscriptions on bills with a defect[8].
3.
Issuance of a bill by an unauthorized person.
4.
Non-compliance with the form and details of the bill[9].
5.
Admission to the accounting of bills drawn up and accounted for on behalf of
fictitious persons or, although existing, but without their participation and
knowledge.
6.
Embezzlement of funds by an employee of a credit institution by drawing up
forged bills for their relatives or trusted persons.
7.
Forcing individuals to issue promissory notes under the influence of deception
or abuse of trust:
7.1.
under the pretext of signing documents for charitable purposes;
7.2.
forced to conclude an unprofitable and illegal transaction;
7.3.
selling property at obviously inflated prices (several times higher than the
cost of a property);
7.4.
forced to conclude a gift agreement ("friendly gift").
Such
a method of fraud as the issuance of unsecured bills was widely used by
criminals. Representing themselves as well-known in certain circles, wealthy
citizens, or spreading false rumors about their recently received inheritance,
a large win on the stock exchange or acquisition of property as a result of
successful business activity, criminals issued bills of purchase for
significant amounts or debt obligations. Having received money or goods from
the bill holder, the scammers have disappeared. Subsequently, it turned out
that information about the relationship with noble persons or possession of
gold mines by criminals turned out to be false.
In
a multi-volume criminal case, which received the title "Club of Jacks of
Hearts" in the press, a number of episodes were considered by the court in
which criminals used the mentioned above method of fraud. In particular,
"spreading false information about the wealth of citizen Protopov, citizen
Davydovsky made loans on his behalf, forcing him to issue non-monetary bills
and then discounting them to different persons"[10].
The
defendant Kalinin took a loan from the merchant Oldenburg, who gave him part of
money, and received bills of exchange for the rest of the amount, allegedly
written by proxy of the mother and two sisters of citizen Davydovsky in the
Tula Civil Chamber, while such a state institution never existed. The defendant
Dolgorukov introduced himself as the nephew of the Governor-General of Moscow
and, without checking his solvency, purchased horses on unsecured bills in the
amount of 4,500 rubles.
The
defendants Erganyants and Massari misled a number of people about their
well-being, having received 14,000 rubles under promissory notes. Erganyants
reported that he was the executor of the wealthy Princess Levashova and would
receive a significant amount of money on the sale of her estate, as well as
that he was married to her ward, and part of the funds under the spiritual will
of the princess should certainly go to him[11].
There
have been cases of issuing promissory notes by an unauthorized person, in
connection with which the regulatory legal acts provided for an exception to
the general dispositive rule on allowing the issuance of promissory notes to
all persons[12].
Non-compliance
with the form and details of a bill as a method of fraud on securities market
was widely used by criminals. Using credulity and inexperience of a bill
holder, the fraudsters drew up a bill of exchange with a defect that made it
insignificant. Having received goods or money from the bill holder, the guilty
persons disappeared or refused to satisfy the creditor's claims on the bill
within the specified period, indicating its defect.
Opportunities for abuse were created by the issuance
of blank bills, i.e. bills in which a payer and a payer of the bill are
designated (in a bill of exchange, since they coincide in a simple one). In
cases where a security fell into the hands of intruders, it was enough to enter
the name of the remitter into the bill and present it for payment,
subsequently, the legality of ownership of the bill had to be defended in
court.
With
the legislative consolidation of the provisions on the establishment of credit
institutions in Russia, a new way of fraud in the securities market has
appeared - the theft of funds by an employee of a credit institution by drawing
up forged bills for their relatives or trusted persons. Employees of credit
institutions, using their official position, carried out certain banking
operations in their personal interests that related to the functions of credit
institutions and were related to the use of securities, in particular,
accounting for bills and other term trading securities or obligations based on
trade transactions, buying and selling securities at their own expense[13]. After performing these operations, the bank employee had to cover the
shortage of funds of the credit institution, since significant funds were
required to purchase securities. In this case, he executed the bank's
obligations with the help of bills of exchange in the name of his relatives or
close persons, acting as a bill collector, and subsequently transferred the
debt on the bill to third parties.
In
the case brought against Lyubarsky-Written E.P. on charges of abuse in the
Yekaterinoslav Commercial Bank, it was established that Lyubarsky-Written E.P.
purchased interest-bearing securities of the Hartman, Donetsk-Yuriev companies,
after which, to cover the debt, he made forged bills in the name of his wife
and withdrew 90,000 rubles from the bank for her shares. Responding to the
arguments given by the prosecution during the judicial review of these cases
regarding the prohibition of lending in his own bank to persons holding senior
positions, the defendant justified the legality of his actions by the rule
established in the Regulation of 04.29.1902 that in all bank charters approved
before 1888, members of the management board can be credited without
restriction. If the commission of the specified operation is prohibited, it
must be liquidated within a year[14]. In the charter of the Commercial
Bank, the ban on this operation was not fixed.
Coercion
to issue bills by individuals under the influence of deception or abuse of trust
was used by fraudsters in various forms, in particular, under the pretext of
signing documents for charitable purposes, fraudsters urged the victim to sign
bills with an obligation to pay a significant amount of money to the bill
holder. Since promissory note is an abstract obligation, i.e.
"detached" from its foundation, it did not specify the purpose of the
promissory note obligation, and its holder could use the amounts of debt
received at his discretion.
The trial of the case on charges of Abbess
Mitrofanya of committing fraudulent actions - forgery of promissory notes by
Medyntseva and Solodovnikov became widely publicized, since in the criminal
practice of those years women rarely acted as an organizer and performer of
fraud.
During the investigation, it was
found that Abbess Mitrofanya forced Medyntseva "... to sign forms on
sheets of paper, under the guise of submitting petitions to various persons for
the removal of guardianship, who have now turned into debt obligations,
according to Abbess Mitrofanya, for 50,000 rubles, but as it turned out in
reality - for 300,000 rubles." The forms were lured out by the promise of
assistance from famous people... "to remove custody from Medyntseva
"... and debt obligations were entered in back datess when custody did not
exist"[15]. In addition to these acts, the
defendant was also charged with forgery of Mr. Solodovnikov's promissory notes.
"The bills of his died brother, the manufactory adviser Mikhail
Solodovnikov, issued in the name of the Serpukhov merchant of the 2nd guild
Alexei Platonov Mikhalin..."[16], with whom the deceased had neither business nor friendly contacts,
were received for collection. Abbess Mitrofania filed a lawsuit against the
heirs of Mr. Solodovnikov to recover from them bills in the amount of 480 000
rubles.
Another
form of coercion to issue promissory notes by individuals under the influence
of deception or abuse of trust was coercion to conclude an unprofitable and illegal
transaction. Criminals came into contact with a potential victim and tried to
find her "weak points" (inexperience in contractual practice, a
tendency to drink alcoholic beverages) in order to gain confidence and force
the victim to write bills in their favor.
In
one of the episodes of the "Club of Jacks of Hearts" case, the
malefactors, having drugged the merchant K.F. Eremeev, who had a fortune of
150,000 rubles, fraudulently forced him to write out promissory notes for
several tens of thousands of rubles. First, they "... offered to buy 8
horses under Yeremeyev's bill of 15,000 rubles, allegedly for a discount they
took a bill for a large amount of money," while the merchant distributed
dozens of ruble bills to the "company". Yeremeyev "... was given
to sign a stamp paper, which he spoiled by 40 rubles," after which he
wrote out 3 bills for 1500 rubles, another bill for 20 rubles, and even drew up
an agreement with the members of the "company" on the method of
satisfying bills[17].
A very common crime was commercial
forgery of bills of exchange, despite the fact that the form, details of the
bill, the rules for transactions with this security were sufficiently regulated
by the Bill of Exchange Charter of 1729 [18].
During investigation against
Berenson, Savitsky, Zhukov and Slonimsky on charges of forgery of bills of
Count Shuvalov, it was found out that the defendants presented 5 forged bills
of 50,000 rubles from the name of Count P.P. Shuvalov and a letter on the
letterhead of the Count, whose signature was certified by a notary, for sale to
private individuals. After checking the creditworthiness of Count Shuvalov, the
bills were taken into account by creditors, the funds for them were paid to
Berenson, and the demands for payment were presented to the Count[19].
It
should be noted that the pre-revolutionary criminal practice was characterized
by only partial forgery of bills of exchange, since the criminals did not have
the necessary technical means to produce a forged document in its entirety.
They made changes to the existing forms of securities. The following case from
judicial practice is indicative:
In
the case of Gulak-Artemovskaya and Bogdanov, who were accused of forgery of
bills of exchange[20], it was established that in 1877,
after the death of an honorary hereditary citizen N.A. Pastukhov, a sworn
attorney came to his brother and presented 3 bills of 18,000 rubles each for payment.
The appearance of the presented bills was motivated by the card loss of the
late Gulak-Artemovsky, with whom he had friendly relations and repeatedly spent
evenings together. However, after examining N.A. Pastukhov's personal
documents, conducting an expert examination and conducting other investigative
actions, it was found that the text on the bills and signatures were executed
by various persons and had nothing to do with N.A. Pastukhov's signature.
Reacting to the widespread abuse of
promissory notes, the legislator introduced in the XVII century special rules
on criminal liability for committing fraud of this kind. Until the middle of
the XVI century, fraud was not distinguished in regulatory legal acts as a
separate crime corpus delicti, and the actions of persons guilty of committing
theft of someone else's property in a fraudulent way were covered, first of
all, by such a type of larceny as theft. In particular, M.F.
Vladimirsky-Budanov notes in his monograph the existence of prohibitions on theft
of other people's property, established in the treaties concluded between
Russia and Byzantium in 911 [21]. I. Foynitsky, who wrote about the
"roguish nature of property bargaining" in the reviewed period,
mentioned the facts of fraudulent actions by merchants during the sale of goods
in his work[22]. In Russian Pravda, fraud was also
not particularly distinguished from theft, but the concept of theft
("tatba") was developed in more detail in this regulatory legal act[23].
The concept of "fraud" is
found for the first time in the Judicial Code of 1550: "A fraudster is the
same execution as Tatya" (thief) (Article 58)[24]. In subsequent articles, the legislator uses the term
"omaschik", i.e. the one who commits fraud. Thus, deception as a way
of stealing someone else's property began to stand out as a sign characterizing
the composition of fraud.
In the Cathedral Code of 1648.
criminal liability was established for the commission of fraudulent actions[25], and the following acts were distinguished from fraud: "invalid
transactions to the detriment of third parties"; "taking excess
interest"; "composition and subscription", i.e. the compilation
of invalid acts. The Cathedral Code recognized as criminally punishable acts
forgery of documents of a state nature (if there is a state interest or with
participation of state authorities). Criminal liability was not specifically
established for the commission of forgery of documents of a private-property
nature. In this case, the rules on marriage, fraud and extortion were applied.
The Articles of Peter the Great did
not establish responsibility for committing fraudulent actions, including with
securities, and since the abuse of promissory notes became widespread, the
actions of the perpetrators were qualified according to the Cathedral Code of
1649. In paragraph 5 of the Decree "On the court and penalties for theft
of various kinds and on the establishment of workers' houses in all
provinces" of April 3, 1781 [26], a legal definition of fraud was
given, in which "deception" or "fiction" were singled out
as ways of committing larceny by fraud, a guilty person "without will,
without consent" of the proprietor "appropriates" the property
belonging to him.
In volume XV of the Code of Laws of
the Russian Empire of 1832, fraud was distinguished as an independent crime
against property[27], the concept of larceny by fraud
was disclosed in more detail in the Code of Criminal and Correctional
Punishments of 1845 as "any theft of other people's things, money or other
movable property by means of any deception"[28]. The legislator focused on the main sign of fraud - deception, and also
stressed that only movable property can be the subject of theft. Theft of
someone else's real estate by fraud was qualified as "appropriation
through forgery and other kinds of deceptions of someone else's real
estate"[29]. The Criminal Code of 1903 gave a
similar legal definition of fraud[30].
In the middle of the XIX century, securities
were actively used in the Russian civil turnover for registration of
contractual relations, certification of obligations and for other purposes. The
legislator determined the form of securities, their purpose, regulated the
procedure for their issuance and circulation. The most common definition of
securities used by lawyers of the pre-revolutionary period was "the
obligation embodied in the document" (Verkoerperte Forderungsrechte)[31], thus, such a function of securities as the certification of binding
legal relations was emphasized.
In order to structure the idea of
the types of securities that were in commercial circulation and became the
subject or mean of committing a crime, it is necessary to give their classification.
The most common classifications of securities developed by lawyers of the XIX
century are the following:
1. By content: related to property
or obligation law.
2. According to the identity of a
debtor:
state (tickets of state internal and
external interest-bearing loans, state-continuously-profitable tickets, bank
tickets, tickets of the state treasury, consolidated bonds of Russian railways,
mortgage sheets of the state noble land bank, state certificates of the peasant
land bank);
public (borrowed securities of City
land administrations, shares, bonds);
private (check, promissory note).
3. According to the identity of a
creditor: nominal, order (or by order) and nameless (or bearer)[32].
These classifications subsequently
formed the basis of modern classifications of securities used in Russian
jurisprudence. In pre-revolutionary practice, shares received wide circulation,
in addition to bills of exchange. During the reign of Peter I, the rules for
the creation and operation of joint–stock companies (hereinafter - JSC), whose
capital consisted of shares called stocks[33], were fixed at the legislative level, but the first JSC "Russian
Trading Company in Constantinople" was established much later in 1757.
In the XIX century, legislative activity in the field
of regulation of joint-stock legal relations was actively developed. In
accordance with the Manifesto "On the benefits granted to Merchants,
differences, advantages and new ways to spread and strengthen trading
enterprises" of 1807, three organizational and legal forms of legal
entities were established: a faith-based partnership, a full partnership and a
partnership of participants. The partnership of participants was a prototype of
the modern JSC. Subsequently, the Manifesto was reworked into a separate
chapter of the Trade Charter "On Trade Partnership".
Shares, as a general rule, were registered
securities. When they were assigned from one person to another, it was
necessary to inform the management board of the company and rewrite the shares
in the name of the new owner. However, in some joint-stock companies, nameless
shares circulated freely, which created the opportunity for abuse.
In 1836, the "Regulation on Companies on
Shares" was adopted, which introduced new mandatory requirements to the
charter of the Joint-Stock company, which were approved by the Ministry and
were subject to official publication. The activity of JSC became widespread in
the XIX century, and by 1913 the number of JSC was already about 2000 [34].
Bonds[35] and deposit
(credit) tickets appeared in circulation in the XIX century, which was associated
with the issuance of bank loans, and the need for government loans.
Subsequently, the right to issue bonds was granted to legal entities. If the
units provided a share of participation of partial partners in a limited
partnership, stocks - a known share of participation of each member of the
company (shareholder) in this company, then by issuing bonds, a legal entity
made a loan that brought a certain income in the form of interest, announced in
advance.
The
owner of share or stock became a member of partnership or company, i.e. not
only its creditor, but also participant in profits and losses, and the owner of
bond was exclusively a creditor of a joint-stock company, receiving a certain
percentage for the capital lent by him and not taking any part in its affairs[36]. In this regard, responsibility of legal entities issuing obligations
increased, since they received citizens' money for a long period of time and
had to responsibly approach the payment of income on bonds, through the
issuance of which the loan was issued. Citizens, in turn, needed to be
vigilant, to be interested in the business reputation of organizations in which
they invested their funds, since fraud has become common in joint-stock
companies.
It is possible to distinguish the following methods
of committing theft by fraud with shares, used by criminals in
pre-revolutionary Russia: sale of shares with omission or dissemination of
false rumors about the pre-bankruptcy financial condition (solvency) of a legal
entity, speculative term transactions on the rate of interest-bearing
securities, the issue of unsecured shares, etc.
In
the case of D.D. Schumacher's accusation of committing abuses in the Moscow
Commercial Bank, the members of the bank's board, knowing about its financial
collapse, did not take any action to liquidate it, motivating their inaction by
the fact that the bank's charter did not specify specifically which body
(management board, board or general meeting of shareholders) should carry out these
procedures when reducing its investment capital below the minimum limits.
Taking advantage of the flaw in the bank's regulatory acts, the members of the
board committed a number of abuses, including speculation with securities, as a
result of which the bank's depositors suffered damage in the amount of more
than 5 million rubles. Issues of shares with silence about the actual financial
condition of the bank were implemented on the stock exchange[37].
The
sale of shares with silence or the spread of false rumors about the
pre-bankruptcy financial condition (insolvency) of a legal entity could be
committed by both representatives of this legal entity (persons acting on the
basis of the charter or power of attorney) and professional participants in the
securities market (in pre–revolutionary Russia - brokers). In particular, sale
of shares without providing information about the negative financial situation
of the bank through a broker under the fictitious names of the owner took place
during the commission of abuses in a commercial loan bank in Moscow[38].
One
of the most common ways of committing theft by fraud in the securities market
was commission of speculative futures transactions on the exchange rate of
interest - bearing securities and currency[39]. In the indictment in the case of the collapse of Commercial bank in
Yekaterinoslavl, among the abuses committed by members of the Bank's management
Board, "playing on the stock exchange at the expense of the bank itself to
the detriment of its interests ... on behalf of figureheads" was indicated[40]. In the case under conditional name "Banking Epic", the trial
of which was described by G.O. Rosenzweig, persons who held senior positions in
the bank committed “games on the stock exchange with Russian and foreign
currencies and interest-bearing securities”[41].
Since the middle of the XIX century, charters of
organizations have gradually become means of circumventing existing
legislation, since law enforcement practice often did not comply with the
provisions of regulatory legal acts. In 1857, after a sharp decline in interest
rates in state-owned banks, investors, wishing to preserve their income, began
actively to invest in the purchase of shares of JSC. By investing in
securities, individuals wanted to securely dispose of their property and
receive a certain income from it. However, when investing money in enterprises
that promised a sharp increase in interest on them, they had to be aware of the
risk they were exposed to, since credit institutions with a reliable reputation
could not offer quick income. Many organizations, having received significant funds
from depositors and having paid them insignificant amounts of money, ceased to
exist after a short period of time. As a result, hundreds of depositors
suffered losses without receiving back either income or invested funds.
The issue of unsecured shares began actively to be
carried out in the second half of the XIX century in the Russian Empire. M.G.
Iontsev characterized the years 1857, 1864 and 1869 as a "boom of stock
fraud"[42]. Organizations created to commit
fraudulent manipulations with depositors' funds have became prototypes of
modern "financial pyramids".
The conclusion of illegal invalid
transactions, in particular when making speculative transactions with
securities on the stock exchange, was considered as property fraud. In future,
regulatory regulation in terms of criminal law protection of relations in the
securities market was developed in the Criminal Code of 1903. According to the
article 580, communication of deliberately false information to shareholders, which
could cause harm, was recognized a criminal offense[43].
In
pre-revolutionary Russia, securities had an exclusively documentary form, and
therefore it was obvious that there was a need for comprehensive state control
over the turnover of securities, especially bearer securities, because despite
the accounting carried out by the competent authorities (the board of JSC on
shares owned by investors, state commissions – on bonds and other government
securities), abuses with bearer securities were widespread. The loss by the
owner of a security of this type entailed the loss of the possibility of
exercising the right to it.
By
1910, Russia had adopted regulatory legal acts on the comprehensive regulation
of the activities of entities in the securities market, as well as the system
of control and supervision bodies for implementation of legislation in this
area. The Ministry of Finance, in addition to regulating the current activities
of the stock exchange, carried out active legislative work[44]. In 1913, the institute of stockbrokers was reorganized, who began to
be appointed not for life, but for 5 years, prohibitions were imposed on their
purchases of securities at their own expense and restrictions on the rate of
0,5%. A special meeting under the Ministry of Finance, established in 1911
under the chairmanship of N.N. Pokrovsky to revise the regulations on the stock
department of the St. Petersburg Stock Exchange, was actively functioning,
after lively discussions, which put forward proposals for the reform of the
stock exchange.
Thus,
by 1914, a system of state bodies was organized in Russia to counteract abuses
in the sphere of securities turnover, and effective rules for carrying out
activities in this area were developed. Law enforcement agencies actively
contributed to the investigation and disclosure of securities fraud. However,
foreign policy events (Russia's participation in World War I) negatively
affected the country's economy – implementation of government loans to cover
the costs of industry and military defense led to significant increase in
public debt and a sharp drop in the stock exchange rate on the domestic stock
exchange.
In
conclusion, it should be noted that the changing situation, including the state
of regulatory legislation, had a significant impact on the choice of the method
of criminal encroachment by fraudsters, since dispositive norms often did not
fully regulate the rules for the issuance and circulation of certain types of securities,
which can be traced when analyzing specific methods of committing crimes. In
this regard, numerous changes were made to the criminal legislation, including
the development of an official definition of "larceny by fraud".
The
change in the political and state system in Russia as a result of the events of
1917 had an impact on all spheres of society, including the concept of economic
development of the country. After 1917, the nationalization of joint-stock
companies took place, the shares of which, nevertheless, were not canceled, the
owners could dispose of them with the consent of local Councils, but in fact,
during the period of War Communism, securities did not constitute an object of
turnover on the territory of the USSR.
The
decree of the Central Executive Committee of January 21, 1918 annulled all
state domestic and foreign loans, as well as guarantees given by the tsarist
and provisional governments on loans to enterprises and institutions. At the
same time, however, debts to the state itself were not canceled, i.e. it was
supposed to collect loans provided by the state through commercial banks
secured by bonds[45]. The system of nameless securities,
which received the most widespread in the civil circulation, was abolished
(decree of April 19, 1918).
As
A.M. Agarkov notes, "after transition to a new economic policy, the
developed civil turnover and the law and order regulating it revived the
institution of bearer securities and introduced it into the current Soviet law.
However, until very recently it had a very limited meaning"[46]. In 1920, the People's Commissariat of Finance decided to issue in-kind
loans, the first of which was issued for 10 million pounds of rye and was
called the "first grain loan", whose bonds were bought for money, but
the issue amount of the loan and the nominal value of the securities were
expressed in pounds of rye. The owner of the bond had the right to receive an
appropriate amount of natural product upon its repayment.
The
resolution of the Central Executive Committee of May 22, 1922 "On basic
private property shares" regulated the procedure for creating a
joint-stock company. A more detailed consolidation of the issues of the
establishment, activities and liquidation of the Joint-Stock Company was made
in the Civil Code of the Russian Soviet Federative Socialist Republic (RSFSR) of 1922. The creation of a
joint-stock company was allowed to all legally capable citizens, however,
despite the presence of the above-mentioned dispositive norms, this procedure
was strictly controlled by state authorities.
Joint-stock
companies were established on the basis of the charter submitted by the
founders through the Main Committee on Concessions and Joint Stock Companies for
approval by the Labor and Defense Council (Article 323). The charter of the JSC
had to strictly comply with the requirements set out in Article 324 of the
Civil Code of the Russian Soviet Federative Socialist Republic (RSFSR). As a general rule, the shares
were issued registered, if the company's charter did not provide for the issue
of bearer shares.
By
decree of October 13, 1922, it was prohibited to issue bearer securities
without permission of the Сouncil of
people's commissars of
the Union of Soviet Socialist
Republics (USSR). In
subsequent legal practice, only government securities could have a similar
form, which prevented the spread of abuses related to forgery and fraud with
private bearer securities, but did not protect government securities from these
abuses. In connection with development of the public credit system, first bank
notes were put into circulation, and then other types of government securities,
including short–term obligations of the Central Cash desk of the People's Commissariat
of Finance,
bonds of the housing and construction loan of the Moscow City Council and
others. The resolution of the Central Executive Committee and the Council of
People's Commissars of the USSR of January 16, 1925 allowed free circulation
and trading of stock values, which, nevertheless, were subject to strict state
regulation. Thus, during the Soviet period, practically only state securities
were in circulation
During
the New economic policy (NEP) period, the courts considered cases on charges of
false cooperation and abuse of authority in share companies[47]. There were almost isolated cases of criminal prosecution for
committing financial fraud, including with the use of securities. In the 20s of
the XX century, a significant public response was received by the trial of the
case of abuse in the Bazar-Karabulak agencies of the State Bank in connection
with the significant amount of damage, as well as the number of perpetrators
and victims. The law enforcement agencies of the Russian Soviet Federative Socialist
Republic (RSFSR)
suppressed the criminal activities of an organized group (42 defendants)
accused of illegal lending, forgery of bills of exchange and committing a
number of other crimes.
Having
established a retail and semi-wholesale trade company headed by citizen
Kholuisky, its participants began to be credited to the Kuznetsk Agency of the
State Bank. When receiving promissory note and commodity loans, the defendants
did not fill out questionnaires. The information about their property status
was fictitious and was not verified. In the Bank, the amount of registered
bills exceeded those repaid. Recalculations were made 5-7 days after the due
dates of the promissory notes. Illegal lending stopped after the check up of
documentation. However, after the protest of the bills at the notary, it was
found that most of the bills issued on behalf of cooperative organizations and
individuals were invalid. A network of cooperative and state organizations was
also identified, which were figureheads acting in the interests of Kholuisky's
trading company, among which were Saratov office "Dobroflot",
Transport Company, Chaadaev Consumer Society and 9 other organizations, as well
as a number of individuals[48].
In
the Soviet criminal legislation, fraud as a criminally punishable act was first
introduced by the decree of 05.05.1921 "On the restriction of the right to
judicial sentences", but its concept was not disclosed in the specified
normative act. In the Criminal Code of the RSFSR of 1922, fraud was defined as
obtaining property or the right to property for a selfish purpose through abuse
of trust or deception.
In
addition to fraud, the Criminal Code of the RSFSR of 1922 established
responsibility for committing other abuses with securities. In accordance with
paragraph 85, forgery of state interest-bearing securities was recognized as a
criminal offense if it was committed by prior agreement of several persons on
the ongoing basis. Almost exclusively government securities were in
circulation, and consequently, the commission of certain abuses with them was
regarded as an encroachment on the economic stability of the state.
Despite
the introduction of legislative prohibitions on the commission of larceny by
fraud in the securities market in the 20s of the XX century, in practice there
was virtually no judicial statistics on bringing perpetrators to criminal
responsibility for the commission of the mentioned above crimes, since the
issue and circulation of private securities were prohibited. Criminal cases
initiated on charges of committing securities crimes were mostly fabricated,
and in many cases innocent persons were brought to justice.
The
Criminal Code of the RSFSR, adopted in 1926, did not actually amend the wording
of the concept of fraud, defining it as abuse of trust or deception in order to
obtain property or the right to it or other personal benefits (Article 169).
The object of securities fraud were various types of securities, as well as the
right to use property. Deception could be committed both in active (reporting
false information) and passive (omission of facts that need to be reported)
forms.
A
stage in the development of legislation regulating the procedure for issuing
and circulation of bills of exchange was the introduction of the Regulation on
Promissory Notes and Bills of Exchange, approved by the Resolution of the
Central Executive Committee and the Council of People's Commissars of the USSR
on August 7, 1937 and in force to the present[49]. This provision was based on the Geneva Promissory Note Conventions of
1930 [50], adopted in more than 70 countries around the world.
The
resolution of the Central Executive Committee and the Council of People's
Commissars of the USSR of January 7, 1937 "On transactions with currency
values and payments in foreign currency" established the exclusive right
of the State Bank of the USSR to make transactions on the territory of the USSR
with payment documents issued in foreign currency (bills, checks, transfers,
etc.) and with foreign stock values (shares, bonds, coupons to them, etc.). The
resolution specifically stipulated that individuals were prohibited to make any
transactions with certain types of securities, including those listed above.
These actions were qualified as a violation of the rules on currency
transactions. The monopoly of the State Bank of the USSR on transactions with
currency values was confirmed in its Charter of 1949, and subsequently in the
Charter of 1960 [51].
In
the 60s of the XX century, bills of exchange in the USSR were used only in
external calculations. More than 90% of the total number of joint-stock
companies were state-owned, the main goal for them was economic activity, not
capital multiplication. The paradoxical nature of this phenomenon was noted by
M.G. Iontsev, revealing its most amazing feature - comfortable existence of
unprofitable enterprises in the Soviet Union[52]. Since the investment capital of most joint-stock companies belonged to
the state (100% of the state shares of VAO Intourist, Ingosstrakh), the profit
was distributed by the relevant departments.
In
Soviet jurisprudence, securities were determined as "securities issued by
the state (and for capitalist states and individual organizations and
associations) certifying the right of their owner to receive money or other property,
the possession of which is necessary for the exercise of the property right
expressed in them"[53]. Securities acted both as means of
payment and as documents securing the right of their owner to receive income
(stocks, bonds, savings books).
V.G.
Samoilov distinguished two groups of securities: payment documents and stock
values. He referred to bills of exchange, cheques, transfers, payment orders
and letters of credit as payment documents, and to stock securities - those
securities that were issued in foreign currency and granted their holder the
right to receive income (shares, bonds and coupons). The listed types of
securities acted as currency values when making transactions.
Individuals
have widely used such type of security as a check issued by the USSR State Bank
in foreign currency. The check was a security containing the customer's order
to the bank to pay a certain amount of money from the funds available in the
bank from the person who issued the check[54]. The State Bank of the USSR also accepted cheques issued in freely
convertible currency, issued by foreign banks, commercial transport
organizations. External trade bank of the USSR issued personal traveler's
checks, which were the subject of purchase and sale transactions with foreign
banks[55].
In
the 50-s of the XX century, crimes were committed in the USSR that violated the
rules of circulation of currency values, including speculation with them. Criminals
had an opportunity to organize illegal circulation of securities. The public
danger of these acts was that the economic foundations of the state were being
undermined, and the Soviet monetary system was being damaged. Illegal
transactions with securities could lead to the fact that an illegal foreign
exchange market developed in the USSR, i.e. a set of state-controlled
transactions with securities made by private individuals. In turn, the price
difference during the resale of securities could lead to spontaneous
fluctuations in the economic situation and negatively affect the financial
balance of the country.
During
the Soviet period, there was a quasi-securities market, since the possibility
of circulation of private securities issued by individuals and legal entities
was practically declarative. In fact, in the 30-s of the XX century, the
government securities market began to take shape, which functioned until the
early 90s of the XX century. As a result of the analysis of the development of
the securities market and criminal manifestations in the sphere of securities
circulation in the pre-revolutionary and Soviet period of Russia's history, the
following conclusion can be drawn.
Securities
appeared in the civil circulation of Russia much earlier than the regulatory
legal regulation of the protection of public relations in the sphere of their
issue or circulation[56]. The changing situation, including
the state of regulatory legislation, had a significant impact on the choice of
the method of criminal encroachment by fraudsters, since dispositive norms
often did not fully regulate the rules for issuance and circulation of certain
types of securities, which can be revealed when analyzing specific ways of
committing these crimes.
In
the late 80-s - early 90-s of the XX century, due to the beginning of political
and economic reforms, a radical change in legislation was required, especially
in the field of civil, financial, commercial, and tax law. However, the process
of legal regulation, as usual, lagged significantly behind the changes in the
economy and socio-political life of the country. In this regard, for a long
time there was no detailed regulatory framework regulating legal relations in
the field of securities circulation.
In
the scientific community, there are different points of view regarding the
periodization of the formation of the securities market in the Russian
Federation. In particular, N.S. Rebchenko suggests considering three stages:
Stage I: 1991-1994, stage II: 1995-1997, stage III: 1998- present. A number of
scientists note the following factors that determined development of the
Russian market at the first stage:
1)
large-scale privatization and the associated issue and circulation of shares of
privatized enterprises;
2)
development of the practice of financing the deficits of the federal budget and
the budgets of the constituent entities of the Russian Federation through the
issuance of securities, as well as the restructuring of internal foreign
currency debt based on the issuance of securities;
3)
crisis of non-payments and appearance of specific financial instruments (treasury
obligations, tax exemptions and promissory notes) due to the shortage of
financial resources in circulation
4)
issuance of securities and their surrogates by new commercial entities,
including unlicensed financial companies;
5)
gradual opening of access to international capital markets for securities
issued in the Russian Federation[57].
At
this stage, the regulation of the securities market was carried out on the
basis of subordinate regulatory legal acts of the executive authorities of the
Russian Federation[58], there were gaps in the legislation
regarding many issues of the activity of subjects of economic legal relations.
Against
the background of privatization of State property and issuance of unsecured
securities by private organizations, significant abuses were committed,
especially theft by fraud in securities market. The most common method of fraud
was organization of a "financial pyramid". A.V. Belyanin and O.G.
Isupova described it as "a private company that attracts deposits from
individuals, promising incredibly high interest rates, many times exceeding
market rates; for some time the company maintains its reputation and pays its
own funds, but then turns out to be bankrupt"[59].
In
Russia, embezzlement by fraud under the scheme of a "financial
pyramid" began to be committed in 1993 - 1994. Securities or their
surrogates were used as a financial instrument, to which the principle of
self-quoting was applied, i.e. artificial creation of the effect of liquidity
of securities. A classic example of a pyramid was JSC "MMM", which
sold its own shares and bought them back, and the price was artificially
increased by the company all the time, which created an incentive to invest.
Payments to depositors were made at the expense of newly attracted persons.
Subsequently,
JSC "MMM" expanded the range of its operations – not only shares were
issued, but also "MMM" tickets, "MMM" certificates, like tranches
of government securities. Surrogates of securities of JSC "MMM" took
a leading position on the stock market in Russia, in some months they accounted
for more than two-thirds of the exchange turnover. The struggle of state bodies
with the circulation of "MMM" tickets has been unsuccessful for a
long time, and when, finally, the Federal Commission on Securities Market of
the Russian Federation officially recognized "MMM" tickets and
certificates that do not have the legal regime of securities, the surrogates of
securities issued by "MMM" ceased to be quoted on stock exchanges, in
credit institutions.
Along
with "MMM", such large fraudulent structures as JSC
"Hopper-Invest", JSC "Russian House of Selenga" and others
operated in Russia. Many of them did not have a license required to issue
securities[60]. In 1994, the damage from fraud in
the private investment market amounted to more than 454 billion rubles and 13.5
million dollars, the number of defrauded depositors – 430000 people. According
to the data of the State Committee for Property Management of the Russian
Federation, as of June 1994, 7 companies were identified whose management stole
the privatization checks of their depositors, as a result of which criminal
cases were initiated against the heads of these companies[61].
Despite
significant abuses committed during issuance of securities and process of their
circulation, the foundations of the securities market began to form in Russia
by 1995. In 1995, the number of fraudulent structures decreased to 24, and the
amount of stolen - to 32 billion rubles, and already in 1996, no major fraud
was registered[62].
The
Decree of the President of the Russian Federation "On approval of the
concept of development of securities market in the Russian Federation"[63] laid down the main directions of development of securities market in
Russia. A special state regulatory body in this area was created – the Federal
Commission for Securities Market in the Russian Federation[64], which in order to ensure control over the legality of the activities
of securities market entities carried out a number of measures, including licensing
of professional participants in securities market in 1997.
During
the reviewed period the main regulatory legal acts regulating the activities of
stock market entities were adopted, including the Civil Code of the Russian
Federation[65], federal laws "On the
Securities Market"[66] dated 22.04.1996 No. 39–FZ,
"On Joint Stock Companies"[67] dated 26.12.1995 No. 208-FZ, "On Promissory Notes and Bills of
Exchange"[68] dated 11.03.1997 No. 48-FZ, other
laws, as well as acts of the Ministry of Finance of the Russian Federation, the
Central Bank of the Russian Federation and other federal executive authorities
specifying the provisions, laid down in the listed laws. Nevertheless, some
issues regarding the activities of securities market participants have not
found their legislative consolidation in these regulatory legal acts, and
certain legal norms contained provisions that were used by many persons to
abuse the rights of other entities.
In particular, the Law on
Joint-Stock Companies adopted in 1995, by introducing a rule on the
consolidation of shares[69], created an opportunity for abuse
by the owners of a controlling stake. As a result of the consolidation of
shares, that is, the issue of one with a large nominal value instead of a
certain number of shares, minority shareholders became owners of fractional
shares that were subject to redemption by the company.
This rule has become widely used by
shareholders who decided to gain absolute control over the company, displacing
minority shareholders from it who had no intention of leaving it. Since January
1, 2002, after the entry into force of the amendment to this provision of the
Law, the negative practice of ousting owners of a small number of shares has
been suppressed[70].
Noting
the active development of investment process in the Russian economy, N.S.
Rabchenko provides the following data: "By the end of 1997, the market
capitalization was equal to nearly 1.2 trillion rubles, according to the
International Finance Corporation, the Russian market was recognized as the
most profitable emerging market 1997"[71].
Criminals
began to use bills of exchange in transactions with natural and legal entities.
The types of deception used by the subjects of crimes are very diverse and are
constantly being modified depending on changes in legislation, the situation of
fraud, however, as noted by V.A. Gamza and I.B. Tkachuk, "... the basic
scheme of their commission remains unchanged. The fraudster assumes a certain
obligation, which he does not intend to fulfill, commits a false deed, receives
money, other property or the right to it (a bill of exchange) in payment for
the obligation (false deed), turns the property in his favor, and then evades
fulfilling his part of the obligations, using various tricks»[72].
The
third stage of development of securities market in the Russian Federation was
marked by a financial crisis on the world market, and as a consequence - the
crisis in Russia in 1998, which worsened the situation on domestic stock
market. The implementation of loans at high prices and for a short period of
time caused a rapid increase in internal public debt, which caused an increase
in the cost of servicing it. The amount of funds needed to repay previously
issued debt securities began to exceed budget revenues. Due to deterioration of
the solvency of the Russian Federation and political crisis, foreign investors
began to withdraw their assets from the market of Russian state and corporate
securities, as a result of which their exchange rate fell.
In
1998, the Ministry of Finance of the Russian Federation canceled auctions for
the placement of government bonds. The Government of the Russian Federation has
offered owners of short-term bonds to convert them into medium-term or
long-term with a maturity in 7 and 20 years. Due to reduction of foreign
exchange reserves of the Central Bank of the Russian Federation, devaluation of
the ruble became an inevitable solution. Significant losses as a result of the
crisis were incurred by professional participants of securities market who had
investments in government securities.
At
the same time, financial crisis contributed to the unification of professional
participants in securities market into self-regulating organizations and
consolidation of specialized registrars. The events that took place for a long
time undermined the confidence of individuals in investing in securities. It
was necessary to develop a mechanism for protecting the rights of investors in
securities market, in connection with which new laws were adopted and
amendments were made to the existing ones[73]. Gradually, the securities market began to take form in Russia, the
organization of a system of state bodies in the field of control over the
turnover of securities, the activities of professional participants in
securities market began.
The
analysis of the situation in which social relations are formed in securities
market in the Russian Federation is of particular importance for our research,
since it has a direct impact on the possibility of committing criminal
encroachments in the sphere of the mentioned legal relations.
The
securities market consists of three segments, including legal relations: (1)
when issuing securities; (2) in case of primary alienation of equity securities
and other types of securities ("primary securities market"), (3)
secondary placement of securities with the involvement of professional
intermediaries ("secondary securities market")[74]. The current legislation provides for standards for the functioning of
all three segments of securities market, with certain features inherent in
certain types of securities.
From
the point of view of the "life cycle" of a security, it is possible
to distinguish primary and secondary securities markets. The primary market
covers the initial sale of securities issues, as a result of which the issuer
receives the necessary financial resources, and the investor receives an object
for investing his funds. The secondary market covers the sphere of resale of
securities. Transactions carried out on the primary securities market are
covered by the concept of “placement of securities”, and on the secondary
market – “their circulation”.
The
issue procedure is carried out exclusively by issue-grade securities, which are
characterized simultaneously by the following features: secures a set of
property and non-property rights subject to certification, assignment and
unconditional exercise in compliance with the form and procedure established by
law; is placed by issues; has equal scope and timing of rights within one
issue, regardless of the time of acquisition of security.
Issue-grade
securities undergo an issue procedure, which is a sequence of actions of the
issuer for the placement of issue-grade securities, the stages of which are set
out in the Article 19 of the Law on the Securities Market and Standards for the
Issue of Securities[75]:
1.
Making a decision on the placement of issue-grade securities;
2.
Approval of the decision on the issue (additional issue) of equity securities;
3.
State registration of the issue (additional issue) of equity securities;
4.
Placement of equity securities;
5.
State registration of the report on the results of the issue (additional issue)
of equity securities.
The second segment of
the securities market includes legal relations arising from the primary
alienation of all types of securities (the "secondary market"). The
main regulatory legal acts regulating the general issues of the functioning of
the "secondary securities market" are the Civil Code of the Russian
Federation (Chapter 7 "Securities"), the Law "On the Securities
Market" - in relation to equity securities, as well as other laws and
subordinate regulatory legal acts.
The third segment of the securities
market covers the specifics of the creation and activities of professional
participants in the securities market. The Law "On the Securities
Market" provides for seven types of activities of professional participants
in the securities market: brokerage, dealer, securities management, clearing,
depository, activities for maintaining a register of securities owners,
activities for organizing trading in the securities market. For each type of
activity, both separate laws[76] and subordinate regulatory legal acts have been adopted, regulating in
more detail the procedure for the creation and activities of professional
participants in the securities market[77].
Larcenies
by fraud with the use of securities are actually committed in the second and
third segments of the functioning of securities market, i.e. during the sale of
securities.
The
procedure for changing the owners of an organization may not entail a change in
its sphere of activity[78], but may lead to a re-profiling of
production, a reduction in the number of employees and other adverse changes
associated with the deterioration of the situation of the organization's
employees and (or) shareholders[79]. This process may take an illegal
form – the so-called "corporate (forceful) seizure"[80], which can be carried out both during the ordinary sale of the property
complex of a business company, and during the reorganization of a legal entity.
They have a high degree of public danger due to the fact that they cause
significant damage to the owners of shares[81], lead to reduction in the real sector of the economy, and are often
accompanied by the physical elimination of competitors.
The
scientific community discussed the need to introduce a separate article in a
special part of the Criminal Code of the Russian Federation, establishing
responsibility for illegal seizure of property or a special qualifying feature
in separate articles of the Criminal Code of the Russian Federation[82]. However, the legislator chose the third option – to criminalize the
most common methods of illegal seizure of property by introducing new articles
into the Criminal Code of the Russian Federation. Most often, illegal seizures
were qualified as theft of someone else's property by deception or abuse of
trust (fraud - Article 159 of the Criminal Code of the Russian Federation),
abuse of official position in a commercial organization (Article 201 of the
Criminal Code of the Russian Federation), arbitrariness (Article 330 of the
Criminal Code of the Russian Federation) and other articles of the Criminal
Code of the Russian Federation, depending on the actions actually committed[83]. Subsequently, Federal Law No. 147-FZ of 01.07.2010 introduced Articles
170-1 (falsification of the unified state register of legal entities, the
register of securities owners or depository accounting system), 185-4
(obstruction or illegal restriction of the rights of securities owners), 185-5
(falsification of the decision of the general meeting of shareholders
(participants) of a business company or the decision of the board of directors
(supervisory board) of a business company) into the Criminal Code of the
Russian Federation.
In
the course of the analysis of the activities of the subjects of "corporate
seizures", three main ways of their implementation were identified: 1)
"seizure of an organization" through the purchase of shares by
illegal methods (corporate blackmail)[84]; 2) "seizure of an organization" in the course of its
bankruptcy procedure (illegal alienation of assets at a reduced price); 3)
"forcible seizure" - by forging constituent and other title
documents, their submission to various state bodies (court, tax inspectorate,
state bureau of registration of rights to immovable property and transactions
with it), the actual (forcible) seizure of organization with the involvement of
employees of private security companies.
"Corporate"
seizure can be defined as the larceny of assets of an enterprise committed
fraudulently in order to make a profit of a business company and the
opportunity to influence actively its decision-making or for the purpose of
subsequent withdrawal of assets of the business company. The term
"corporate takeover" is often used as a synonym for the term
"raiding". A raider[85] as a person specializing in
organization and implementation of "corporate seizures", for whom
this type of activity has become a criminal trade, is one of the potential
subjects of "corporate seizure". Thus, raiding can be defined as a
criminal activity for the organization and implementation of corporate
seizures. Since 2007, the investigative bodies of the Russian Federation began
to keep statistics separately on crimes characterized as "raider seizure
of organizations", and such acts began to include:
1)
any embezzlement of stocks or shares in the authorized capitals of legal
entities for the purpose of changing executive bodies, illegal alienation of
assets, or other unlawful disposal of the company's property;
2)
illegal or intentional bankruptcies, as well as abuses in the course of
bankruptcy committed in order to establish control over the property of the
enterprise (state unitary enterprises, municipal unitary enterprises);
3)
facts of submitting fictitious documents about participants and executive
bodies of legal entities, as well as real estate, for registration with state
bodies;
4)
abuse in the issue of securities;
5)
any violent actions used in the course of corporate conflicts to invade the
protected territory of enterprises of any form of ownership related to damage
or destruction of property, causing physical or moral harm[86].
However,
after 2010, the number of corporate seizures of organizations decreased
significantly compared to 2000 - 2008 after the suppression of the criminal
activities of organized criminal groups in Moscow, St. Petersburg, Great
Novgorod and other cities of the Russian Federation.
Another
type of securities fraud is manipulation of prices on the stock exchange. The
legislator has established a ban on committing such manipulations, as well as
on forcing the purchase or sale of securities by providing intentionally
distorted information about securities, issuers of equity securities, prices of
securities, including information presented in advertising[87]. Article 185-3 of the Criminal Code of the Russian Federation
criminalized manipulation in the securities market, defining it as intentional
dissemination through mass media, including electronic, information and
telecommunication networks (including the Internet), knowingly false
information or transactions with financial instruments, foreign currency and
(or) goods, or other intentional actions prohibited by the legislation of the
Russian Federation on countering the misuse of insider information and market
manipulation, if as a result of such illegal actions, the price, demand, supply
or amount of trading in financial instruments, foreign currency and (or) goods
deviated from the level or were maintained at a level significantly different
from the level that would have been formed without taking into account the
mentioned above illegal actions, and such actions caused major damage to
citizens, organizations or a state or are associated with the extraction of
excess income or avoiding large-scale losses. There is no practice of bringing
to justice for the commission of the mentioned crime, since it is difficult to
determine all the circumstances to be established in cases of price
manipulation, as well as to collect the necessary evidence[88].
Due
to the digitalization of legal relations, the effect of restrictive measures to
counter COVID-19 during the pandemic, there has been a significant increase in
crimes in the field of information and communication technologies[89]. Fraudulent schemes using smartphones, Internet resources, as well as
financial pyramids have once again become widely used on the territory of the Russian
Federation. Victims of such crimes are not only pensioners, but also a wide
range of citizens. So, in July 2021, the organizers of the Finico financial
pyramid in Kazan were detained, who are accused of committing fraudulent acts[90]. They attracted victims' money to invest non-existent activities and
even created a new "currency" - dates. Problematic aspects of
countering fraud using Internet technologies are: 1) remoteness of criminals
and victims, who in many cases are not only in different subjects of the
Russian Federation, but also in different countries. As a consequence of this
circumstance, difficulties in production of investigative and other procedural
actions in the execution of requests for legal assistance in criminal cases –
the absence of bilateral and multilateral treaties and political tension
between individual states. 2) completeness of the establishment of the
circumstances included in the obbject of proof (Article 73 of the Code of
Criminal Procedure of the Russian Federation), in particular, the place of
commission of crime and the "binding" of the guilty person to it.
Accused, as a rule, put forward a version about the use of their gadgets by
other persons, whether they are cellmates in places of detention or
acquaintances at their place of residence or work. 3) interaction of
investigative bodies with other state bodies, credit organizations, mobile
operators to assist in production of investigative and other procedural
actions, development and introduction of a set of measures to prevent the
mentioned above crimes (prohibition of the use of SIM cards with floating
numbers, restrictions on the number of SIM cards registered for one person,
blocking suspicious financial transactions (for a large amount of money and not
characteristic of the client), etc.
In
2012 – 2016, amendments were made to the Criminal Code of the Russian
Federation regarding the differentiation of types of fraudulent actions and a
number of special norms were introduced, in particular, Part 5 of Article 159
(fraud involving intentional non–fulfillment of contractual obligations in the
field of entrepreneurial activity, if this act caused significant damage),
Articles 159.1 - 159.6. In this context, articles 159.3 (fraud using electronic
means of payment) and 159.6 (fraud in the field of computer information, that
is, theft of someone else's property or acquisition of the right to someone
else's property by entering, deleting, blocking modification of computer
information or other interference in the functioning of storage, processing or
transmission of computer information or information and telecommunication
networks). At the same time, in 2018, criminal liability was established for
the commission of qualified theft - paragraph "d" of Article 158 of
the Criminal Code of the Russian Federation - theft from a bank account, as
well as in relation to electronic money (in the absence of signs of a crime
provided for in Article 159.3 of the Criminal Code of the Russian Federation) .
Explanations on the differentiation of these elements of crimes are given in
paragraph 25.1 of the Resolution of the Plenum of the Supreme Court of the
Russian Federation dated 27.12.2002 No. 29 "On judicial practice in cases
of theft, plunder and robbery" (ed. from 06.29.2021)[91].
As a result of the analysis of
formation and development of the securities market, as well as criminal
manifestations in this area in modern Russia, the following conclusions can be
drawn: 1. With transition to a market economy in Russia in the 90s, a new
regulatory framework regulating the functioning of securities market was
developed. Many legal institutions were borrowed from pre-revolutionary and
foreign practice. At the same time, some normative legal acts adopted in the
USSR continued to operate for a certain period, and some of them are an
integral part of Russian legislation at the present time. The legislator has
settled the general issues of the functioning of the segments of securities
market in the Russian Federation, however, the legislation regulating the
procedure for the issuance and circulation of securities is in the process of
formation. Changes are constantly being made to legal norms that create
conflicts on the issues under consideration, as a rule, after the negative
practice of their use in the commission of abuses, including criminal ones. The
legislator took the path of criminalizing the most common ways of abuse in the
sphere of securities circulation and corporate legal relations. New criminal
law norms were also introduced, establishing liability for fraud, including
with the use of securities, and differentiated depending on the method of
commission, a certain sphere of legal relations where crimes were committed,
and according to other criteria.
2. After introduction of securities
into circulation in the 90s of the XX century, new ways of committing larceny
by fraud with their use appeared. The absence of a detailed regulatory
framework regulating the securities market for a long period of time, low
efficiency of supervisory, control and law enforcement agencies, introduction
of securities into circulation among the population, with which most citizens
did not know how to handle, due to lack of experience and special knowledge, had
a significant impact on the criminal situation in the country.
3. Scientific and technological
progress, expressed in digitalization of legal relations, transition mainly to
electronic, including remote, calculations, widespread use of smartphones,
tablets and other gadgets by the population, led to the introduction into
criminal practice of new methods of fraud in the field of information and
communication technologies, counteraction of which has a number of legal,
organizational and technical features.
This is the first chapter of the
monograph dedicated to the problems of investigation of securities fraud. It
examines historical aspects of the development of the securities market in
Russia and abuses in this area with an analysis of examples from forensic
practice and scientific points of view. The chapter consists of two paragraphs
devoted to the Pre-revolutionary and Soviet historical periods, as well as the
current state of the securities market and the crime situation in this sphere.
Keywords: criminalistics,
investigation, fraud, security, securities market.
[1] Yani S.A. noted that "... in order to improve and effectively use
the existing criminal legislation in order to strengthen the fight against
fraud, the entire history of development of criminal law fight against this
type of crime should be carefully analyzed". // Yani S.A. Fraud
investigation. Abstract dis. … cand. legal sciences. Moscow, 1967. P. 2.
[2] Nersesov N.O. cites in his monograph a case that occurred at the end of
the 14th century, when the Grand Duke, sending his envoys to Constantinople,
gave them white charters with an attached grand ducal seal, in order to write
bondage on them if necessary, thanks to which they had the opportunity to make
loans from foreign merchants. // Nersesov N.O. Selected works on representation
and securities in civil law. Moscow, 2000. P. 191.
[3] Ital. lettera di cambio, Ger. Wechsel, Wechsel-Brieff, French – lettere
de change, Eng. - note, bill of exchange; in translation - change, alternation
// Tikhomirova L.V., Tikhomirov M.Yu. Legal Encyclopedia. Ed. 5th, add. and
reworked. / Ed. M.Yu. Tikhomirov. Moscow, 2001. P. 115.
[4] Tabashnikov I. Past of bills. Historical and legal research. Odessa,
1971. P. 61.
[5] Barats S.M. Bill of exchange course. SPb., 1893. P. 670.
[6] Bill charter. – M.: Pech. At the Senate, June 23, 1729. // Cited.
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5. Legislation during the heyday of absolutism. - Moscow, 1987. P. 421 - 458.
[7] The issuance of unsecured bills was one of the ways of committing
abuses in the Kronstadt Commercial Bank // Process of the Kronstadt Commercial
Bank. Speech of the Prince A.I. Urusov, parting word to the jury A.M. Kuzminsky
and the conclusion of the chief prosecutor N.A. Neklyudov // Judicial dramas.
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[8] Deliberately defective making of endorsements on promissory notes under
the influence of coercion or deceit was a way of committing a crime under
Articles 59, 1666, 1671 of the Penal Code.
[9] .P. Tsitovich noted that
"... only a bill of exchange formally correct, in the fullness of its
meanings in general, suitable for making a protest against it in
non-payment" can be presented for payment. // Tsitovich P.P. Proceedings
on commercial and bill of exchange law. In 2 vols. T. 2. Course of bill of
exchange law. M., 2005. P. 283-284.
[10] Protocol of the meeting of the Moscow District Court in the case of the
"Jacks of Hearts Club". PP. 6-7.
[11] The same source. PP. 36, 41, 59, 61, 66.
[12] In accordance with
the Bill of Exchange Charter of 1729 all persons who, by law, were allowed to
enter into debt obligations, could be bound by bills, both simple and
transferable, however, by decrees of the emperor of August 31, 1752, of July 15,
1761, they were excluded from the circle of persons who could act in as
drawers: persons of the clergy of all faiths; peasants who do not have
immovable property, if they have not taken trade certificates; married women
without consent of their husbands; girls who are not separated from their
parents, if they do not independently conduct trading activities. // Russian
legislation of the X - XX centuries. In 9 volumes. T. 5. Legislation during the
heyday of absolutism. - Moscow, 1987. P. 480 - 481.
[13] Kavelin K.D. Selected works on civil law. M., 2003. P. 486.
[14] The speech of the real State Councilor Lyubarsky-Pismenny E.P., spoken
by him in his defense in the case of abuses in the Yekaterinoslav Commercial
Bank. M., 1904. P.3.
[15] Indictment in the case of the
Head of the Moscow Diocesan Empress of the Intercession Community of the
Sisters of Mercy and the Serpukhov Monastery, Abbess Mitrofania, and other
accused of various crimes. I. The case of Medyntseva. P.3.
[16] The same source.
[17] Protocol of the meeting of
the Moscow District Court in the case of the "Jacks of Hearts Club".
M., 1877. P. 3-4.
[18] Bill charter. – M.: Printed at the Senate, June 23, 1729. P. 1 - 23. //
Cited. Quoted from: Russian legislation of the 10th – 20th centuries. In 9 volumes.
T. 5. Legislation during the heyday of absolutism. - M., 1987. P. 421 - 458.
[19] Protocol of the court session on the charge of Berezovsky, Slonimsky
and others in the forgery of Count Shuvalov's bills. M., 1904. P. 2 - 4.
[20] Speech by Prince I. Urusov on
the case of Gulag-Artemovskaya at a meeting of St. Petersburg District Court
from October 20 to 23, 1979 // Judicial dramas. 1902. Vol. 15. Book. 11. P. 3 -
5.
[21] Vladimirsky-Budanov M.F. Review of the history of Russian law. Rostov-n
/ D, 1995. P. 308 -310.
[22] Foinitsky I. Fraud under Russian law. Comparative study. SPb., 1871. P.
9.
[23] Reader on the history of the internal state and law. M., 1987. P. 13
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[24] The same source. P.42.
[25] Chapter XXI article 11 of the Cathedral Code // Russian legislation of the
X - XX centuries. M., 1985. Vol. 2. P. 243 - 246.
[26] Complete collection of laws of the Russian Empire. Collection 1. Vol.
XXI. No. 15147.
[27] Code of Laws of the Russian Empire. Vol. XV. SPb., 1832.
[28] Code of Laws of the Russian Empire. Vol. XVI. SPb., 1887.
[29] Code of Laws of the Russian Empire. Vol. XVI. SPb., 1887.
[30] Criminal Code of 1903. SPb., 1903.
[31] Nersesov N.O. Selected works on representation and securities in civil
law. M., 2000. P. 139.
[32] The same source. 142 - 146.
[33] A share as a type of security appeared in Russian legislation from
the German law (from Latin actio - action, order; German - die Aktie; in
English share, American version - stock) // Tikhomirova L.V., Tikhomirov M.Yu.
Legal Encyclopedia. P. 34. The introduction of shares into circulation was
enshrined in Decrees of October 27, 1699, October 27, 1706, March 2, 1711 and
November 8, 1723 // Complete collection of laws of the Russian Empire. Vol. 3.
No. 1706. Vol.7. No. 4348.
[34] Iontsev M.G. Joint stock
companies: Legal bases. property relations. Management and control. Protecting
the rights of shareholders. M., 2002. P.9.
[35] Bond (inscription) - from lat. obligatio - obligation; English - finance
bond, obligation; German – die Obligation // Tikhomirova L.V., Tikhomirov M.Yu.
Legal Encyclopedia. P. 557.
[36] Kavelin K.D. Selected works on civil law. M., 2003. P. 494.
[37] Speech of sworn attorney V.D. Spasovich, delivered in defense of D.D.
Schumacher at the meeting of the Criminal Cassation Department on April 10,
1877 in the case of the Moscow Commercial Loan Bank. M., 1977. P. 3-11.
[38] Copies of decisions and protocols in the case of abuses in a commercial
loan bank in Moscow, produced by investigator of the Moscow District Court for
the investigation of particularly important cases Globo-Mikhalinsky. M., 1875 -
76. P. 17 - 20.
[39] Note by V.A. Svishchov in the case of abuses in the Commission Bank.
SPb., 1897.
[40] Snegirev L.F. Yekaterinoslav process. With preface of A.M. Palkhovsky
// Judicial dramas. 1905. XV-XVI.
[41] Rozentsweig G.O. From the courtroom. Judicial essays and pictures.
SPb., 1900. P. 278.
[42] Iontsev M.G. Joint stock companies: Legal bases. property relations.
Management and control. Protecting the rights of shareholders. M., 2002.
[43] It could consist in the following actions: “...in placing deliberately
false information about the state of affairs or accounts in a publication,
report, balance sheet or trading book; in providing a knowingly incorrect
calculation for the calculation and for the issuance of a dividend; in the
issuance of bonds or mortgage accounts that are not secured by a deposit in
accordance with the charter; in the issue of bonds or other securities in an
amount exceeding this permission. // Criminal code of 1903. SPb., 1903. Art.
580.
[44] Improvement of the quotation rules was reflected in the “Instructions
for the Quotation Commission at the Stock Department of the St. Petersburg
Stock Exchange”, approved by the Ministry of Finance, which supervised the
activities of brokers; Saint-Petersburg Stock Exchange", in 1912 -
"Rules for the delivery to the quotation commission by brokers and other
full members of the stock department at the St. Petersburg Stock Exchange of
the data necessary for compiling quotations." // Shabalin A.O. Development
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[45] The same source. P. 70.
[46] Agarkov M.M. Selected works on civil law. In 2 volumes. Vol.1. M.,
2002. P. 106.
[47] Trial of embezzlers and false cooperators. Agitation-staging by A.A.
Vlasov. M., 1928.
[48] Klebansky M., Milov V., Paperny S. The trial of the authorized
cooperative. M., 1927. Indictment in case No. 15 on abuses in the
Bazarno-Karabulak agencies of the State Bank. Saratov, 1926.
[49] Regulations on a promissory note and a bill of exchange No. 104/1341 of
08/07/1937, approved by Decree of the Central Executive Committee and Council
of People's Commissars of the USSR // Code of Laws of the USSR. 1937. No. 52.
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358 of 07.06.1930 (entered into force for the USSR on November 25, 1936) // SZ
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[51] SP USSR. 1960. No. 18. Art. 160.
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[54] Instruction of the State Bank of the USSR dated 12/15/1961. No. 1008.
[55] There were also checks of a special type in circulation - cut-off
checks of Vneshtorgbank of series "A" and series "D". The
value of series "A" checks was indicated in rubles and they were
issued to Soviet citizens - members of the crews of Soviet ships of foreign
navigation at their request in exchange for foreign currency due to the daily
allowance for the flight for the purchase of goods and products in specialized
stores of Torgmortrans. Checks of the "D" series were intended for
foreign citizens in exchange for foreign currency for sale in specialized stores
of Vneshposyltorg and Beryozka. They could be exchanged for foreign currency or
traveler's checks of the State Bank of the USSR in foreign currency and were
treated as currency values, being a means of payment. // Instructions on the
procedure for the sale of industrial and food products to Soviet sailors abroad
in foreign currency, approved on 27.08.1963 by the Ministry of the Navy of the
USSR and the State Bank of the USSR.
[56] A.V. Bondar, O.V. Starkov and I.V. Uporov, who analyzed larceny by
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market, noted in their monograph: “This situation fits perfectly into the logic
of the legislative regulation of public relations: first, banks appear as
independent financial and credit institutions, then criminally inclined persons
try to steal other people's property in this area by deceit or abuse of trust,
and only then the state, reacting to this negative phenomenon, establishes
appropriate prohibitions” // Bondar A.V., Starkov O.V., Uporov I.V. Fraud as a
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[74] Art. 1 of the Federal Law
"On the Securities Market".
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[76] On clearing, clearing
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management of a central counterparty as satisfactory, on grounds and procedure
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[78] In journalistic, popular
science and economic literature, this process is usually called “friendly
takeover”, however, this term is not officially enshrined in regulatory legal
acts. // For details, see: Iontsev M.G. Joint stock companies: Legal bases.
property relations. Management and control. Protecting the rights of
shareholders. M., 2002. Korsak A. A revision of the legislation is necessary //
EJ-Jurist. 2005. No. 41. Osinovsky A.D. Shareholder versus joint stock company.
2nd ed., rev. and additional SPb., 2004. Osinovsky A.D. On the barricades of
corporate conflicts. Part I. Everything is for sale. - St. Petersburg, 2006. –
296 p. Pylaev I., Tutykhin V. A guide to hostile takeovers or the art of
corporate wars. M., 2004. Sychev P.G. Corporate wars in modern Russia //
Information Bulletin of the Investigative Committee of the Ministry of Internal
Affairs of Russia. M., 2004. No. 4. Khakimov T.A. Hostile takeovers.
Technology, strategy and tactics of attack // Merger and acquisition. 2003. No.
1.
[79] This process is called "hostile takeover", but there is no
legal definition of it. Iontsev M.G. characterized the concept of "hostile
takeover" of a company as "establishment of complete control over
this company or asset, both in actual and physical sense, against the will of
the management and / or owner of this company or asset", identifying the
concepts of "hostile takeover" and "corporate takeover ".
// Iontsev M.G. Corporate takeovers: mergers, acquisitions, greenmail. 2nd ed.,
revised. and additional - M., 2006. P. 9 - 10.
[80] From English. hostile takeover. Vallask E.V. Securities Fraud: A
Retrospective Analysis, Forensic Characterization, and Investigation Programs.
- St. Petersburg: Legal Center Press, 2007. - 207 p.
[81] A. Korsak notes that as a result of the illegal seizure of enterprises
or hostile takeovers, the subjects of the crime receive shares worth several
tens of millions of rubles. // Korsak A. Revision of the legislation is
necessary // EZh-Jurist. 2005. No. 41.
[82] Vallask E.V. Counteraction to corporate takeovers of enterprises by
criminal law means: analysis of legislative novels // Lawyer. 2012. No. 6. P. 9
- 16. Kozlovskaya A.E. Criminal law protection of property of legal entities
from illegal corporate seizures (criminological and criminal law research).
Abstract diss. … cand. legal Sciences. M., 2009. - 29 p. Sokolov I.A. The state
and development of the criminal law mechanism for countering the illegal
seizure of legal entities (raiding). Dis. cand. legal sciences ... according to
spec. 12.00.08. M., 2014. - 199 p. Voevodkin A.V. Criminal legal protection of
corporate management relations as a way to counter raiding. Dis. cand. legal
sciences ... according to spec. 12.00.08. Yekaterinburg, 2018. - 197 p.
[83] See: Iontsev M.G. Corporate takeovers: mergers, acquisitions,
greenmail. 2nd ed., revised. and additional - M., 2006. P. 215 - 218. Raiders
are advancing. // Russian newspaper. 2006. August 8.
[84] Greenmail (derived from the English words "green" in the
meaning of "money" and "blackmail" - "extortion")
in the national journalistic and economic literature is defined as
"corporate blackmail". The specified term is borrowed from foreign
practice; its official definition is absent in Russian legislation. P. Gohan
believes that “greenmail” is “... a form of targeted share repurchase (targeted
share repurchases), which is a general term that is accepted more broadly and
also includes other share repurchases from a particular group of shareholders,
which, perhaps, even did not think about making a takeover of the company. //
P. Gohan. Mergers, acquisitions and restructuring of companies. / Per. from
English. - 2nd ed. M., 2006. S. 252 - 253. We believe that
"greenmail" can be defined as a set of measures to acquire a minimum
stake in a joint-stock company (usually from a company with "diluted"
capital) by legal and illegal methods (by deception, threats ), obstructing the
holding of a general meeting of shareholders or its disruption, as well as
taking other measures to destabilize the activities of a joint-stock company,
taken in order to force the owners of a controlling stake to buy out the shares
belonging to the "greenmailers" at a price significantly exceeding
their market value.
[85] Raider (from the English raider) - originally the term was used to
refer to sea pirates during the Victorian peroid in England. Subsequently,
"raiders" began to be called marauders. M. Chernigovsky defined
raiders as specialists "... in intercepting the operational management or
property of a company with the help of a specially initiated business
conflict." // Chernigovsky M. With a brief enemy visit // http://www.compromat.ru/main/top50/raider.htm
[86] On strengthening control over the legality and validity of procedural
decisions in criminal cases on raider seizures: Information letter of the
Investigative Committee of the Ministry of Internal Affairs of the Russian Federation
No. 17 / 3-14260 dated 08.08.08.
[87] Paragraph 2 of Art. 51 of the Federal Law "On the Securities
Market".
[88] Ivanova E.V. Financial derivatives: futures, forwards, options, swaps.
Theory and practice. - M., 2005.
[89] Barkalova E.V., Ruchkin K.V., Serova E.V. Topical issues of criminal
prosecution in cases of crimes in the field of information and communication
technologies // Kriminalist. No. 3. 2021. - P. 57 - 64.
[90] https://www.bbc.com/russian/news-58030085 (accessed: 09.01.2022).
[91] Bulletin of the Supreme Court of the Russian Federation. 2003. No. 2.