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Paper info: Examining the Forms of Trust in Operation Within Financial Markets: The Case of the Madoff Ponzi Scheme

Title


Examining the Forms of Trust in Operation Within Financial Markets: The Case of the Madoff Ponzi Scheme

Authors


Annemarie Ryan and
Keith Blois
Lancaster University
United Kingdom
Keith Blois

Place of Publication


The paper was published at the 27th IMP-conference in Glasgow, Scotland in 2011.

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Abstract


Trust plays an important role in facilitating the efficient operation of all types of markets. In the case of modern financial markets, which are extremely complex in structure and whose products include significant tacit elements, trust is particularly critical. This paper will use Fiske’s (1992) categorization of relationships to explore of the role of trust between those operating within financial markets especially between the providers of finance and those who use it. It will show, by examining Madoff’s multi-billion dollar fraud how easily trust can be exploited and will suggest that the contradictory statement ‘trust but verify’ is appropriate to financial exchanges.
KEYWORDS: Trust; networks; finance; relationships; fraud.