4 ms·

How did they prevent fraud with bearer bonds? (The wikipedia page is remarkably silent.) Since no records of ownership are kept, the only evidence of ownershi

How did they prevent fraud with bearer bonds? (The wikipedia page is remarkably silent.) Since no records of ownership are kept, the only evidence of ownership is the bond itself. And given their value there is a large incentive to make fraudulent ones.

refurb 14y ago
Issuers don't have ownership records, but they do know the identity of every bond issued through the bond's serial number. So the only way to create a fraudulent copy, would be to copy an existing bond and it's serial number. Of couse, since the original bonds were as good as cash, they were/are kept under pretty tight security. Not impossible of course, but it did make it difficult to make counterfeit bonds. Also, many bonds had unique security features associated with the bond itself, similar to currency.
- rogerbinns 14y ago
  If it wasn't a sequential serial number, but rather a long random string then that would make a lot more sense. If your serial had been cashed in fraudulently then you would only find out when you tried to cash in the legitimate bond. There is still provides a massive incentive to steal numbers either from the bonds or the issuing company. I'm somewhat sceptical of the security features. Obviously some would exist, but the huge value of the bonds makes forging them attractive. It mentions the bonds being held for many years (possibly decades) so the security features would have to last that long. In the UK they regularly change the bank notes withdrawing old ones from circulation and they are no longer accepted except at the Bank of England. The US doesn't seem to do this.
  - justincormack 14y ago
    I think thats why people collect old bonds, as they were very ornate to make forging harder. Access to quality printing was less widely available, but I am sure there was fraud. However as you had to present coupons for interest and certificates for maturity, I suspect they would check them all together to check for duplicates, manually. I know a few people who worked in that kind of area who are old enough to remember will ask.
ghshephard 14y ago
Re: large incentive to make fraudulent ones. Indeed, there is. :-) http://www.reuters.com/article/2012/02/17/us-usa-bonds-forgery-idUSTRE81G11620120217 http://www.reuters.com/article/2012/02/17/us-usa-bonds-forge... " Italian police said on Friday they had seized about $6 trillion worth of fake U.S. Treasury bonds and other securities in Switzerland, and arrested eight Italians accused of international fraud and other financial crimes." (I know, not exactly what you were getting at, but it's actually one step better - not just creating forgeries of authentic bonds, but creating absolutely new entities)
RockyMcNuts 14y ago
Same way they prevent fraud with cash - paper certificates with features that are hard to copy. Also, the company has a record of what was issued and isn't going to pay off the same bond twice, or one that doesn't match what it issued. Doesn't stop people from trying - http://www.reuters.com/article/2012/02/17/usa-bonds-forgery-idUSL5E8DH41Q20120217 http://www.reuters.com/article/2012/02/17/usa-bonds-forgery-...

refurb 14y ago

Issuers don't have ownership records, but they do know the identity of every bond issued through the bond's serial number. So the only way to create a fraudulent copy, would be to copy an existing bond and it's serial number. Of couse, since the original bonds were as good as cash, they were/are kept under pretty tight security. Not impossible of course, but it did make it difficult to make counterfeit bonds. Also, many bonds had unique security features associated with the bond itself, similar to currency.

rogerbinns 14y ago
If it wasn't a sequential serial number, but rather a long random string then that would make a lot more sense. If your serial had been cashed in fraudulently then you would only find out when you tried to cash in the legitimate bond. There is still provides a massive incentive to steal numbers either from the bonds or the issuing company. I'm somewhat sceptical of the security features. Obviously some would exist, but the huge value of the bonds makes forging them attractive. It mentions the bonds being held for many years (possibly decades) so the security features would have to last that long. In the UK they regularly change the bank notes withdrawing old ones from circulation and they are no longer accepted except at the Bank of England. The US doesn't seem to do this.
- justincormack 14y ago
  I think thats why people collect old bonds, as they were very ornate to make forging harder. Access to quality printing was less widely available, but I am sure there was fraud. However as you had to present coupons for interest and certificates for maturity, I suspect they would check them all together to check for duplicates, manually. I know a few people who worked in that kind of area who are old enough to remember will ask.

ghshephard 14y ago

Re: large incentive to make fraudulent ones. Indeed, there is. :-) http://www.reuters.com/article/2012/02/17/us-usa-bonds-forgery-idUSTRE81G11620120217 http://www.reuters.com/article/2012/02/17/us-usa-bonds-forge... " Italian police said on Friday they had seized about $6 trillion worth of fake U.S. Treasury bonds and other securities in Switzerland, and arrested eight Italians accused of international fraud and other financial crimes." (I know, not exactly what you were getting at, but it's actually one step better - not just creating forgeries of authentic bonds, but creating absolutely new entities)

RockyMcNuts 14y ago

Same way they prevent fraud with cash - paper certificates with features that are hard to copy. Also, the company has a record of what was issued and isn't going to pay off the same bond twice, or one that doesn't match what it issued. Doesn't stop people from trying - http://www.reuters.com/article/2012/02/17/usa-bonds-forgery-idUSL5E8DH41Q20120217 http://www.reuters.com/article/2012/02/17/usa-bonds-forgery-...