If history is any guide, corporations can expect a seriousincrease in internal fraud, legal disputes and regulatory action inthe weeks ahead as a result of the current U.S. economic crisis.Now more than ever, CFOs and compliance officers must take carefulmeasures to strictly follow financial risk management standards andensure new employees have spanking clean records, says PeterTurecek, senior managing director at New York City-based KrollInc.

A new report from the global fraud and litigation consultantcites sharp increases in arbitration claims by investors seeking torecoup losses after Black Monday, Oct. 19, 1987, and following themarket downturns of 1991 and 1992. The Financial IndustryRegulatory Authority (FINRA) reports that new arbitration casesrose 54% from 2007 to 2008 alone, according to Kroll.

Demand for litigation support and asset tracing work forcompanies with failed investments has increased and so haswhite-collar crime enforcement, says Turecek. The Securities andExchange Commission (SEC) pursued 115 enforcement actions relatedto securities offering frauds–as in Ponzi schemes–compared with 68in 2007 and 61 in 2006. An FBI official recently told Congress thatthe agency expects its fraud investigations at major corporationsto jump from 38 cases to hundreds as the crisis deepens.

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