Charts offer best way to find financial fraud

American financial giant Goldman Sachs has been charged with fraud over one of the subprime investment products it created and sold. The only surprise in finding fraud in the subprime products area is that it has taken so long to bring the charges. Investors have been bringing allegations of deceptive subprime product descriptions to courts throughout 2009. More fraud charges in relation to the creation and sale of these products are probably under development.

Unfortunately, fraud and financial markets go hand in hand which is why strong financial market regulators and regulations are required. However, the investors cannot afford to rely only on regulators for protection. Investors must take action to protect themselves against fraud in the market. Fraud comes in many forms, and the global financial crisis quickly exposed many cases of fraud which had been undetected by the conventional analysis of financial fundamentals.

The collapse of US company Enron in 2001 was a good example of fraud that was undetected by conventional analysis. Those investors who do not learn from history and doomed to repeat it. So many of the recent frauds follow the same patterns as the Enron fraud.