Explanation:
Under the Basel II operational risk framework, "Internal Fraud" encompasses losses due to acts of a type intended to defraud, misappropriate property, or circumvent regulations, the law, or company policy, which involve at least one internal party. Examples of this category include intentional mismarking of positions, employee theft, and insider trading on an employee's or the firm's account. Therefore, market manipulation and insider trading fall under Internal Fraud.
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Q.44 A large bank operating in South America has been fined $20 million by the regulator for market manipulation and insider trading on the firm’s account. Under which of the event categories does this action most likely fall under?
A
Business Disruption and System Failures
B
Internal Fraud
C
Employment Practices and Workplace Safety
D
Clients, products, and business practices
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