Last year I wrote about corporate delinquents.

Basically, I argued that unless we were talking about one individual with his or her hand in the till, most corporate fraud involved a delinquent community of people aiding and abetting, either helping themselves to the spoils or turning the other way.

Now this is backed up by an Institute for Fraud Prevention (IFP) report Control Overrides in Financial Statement Fraud which reveals that in most cases, fraudsters are not acting alone.

The study found that CEOs and CFOs were named as participants in the great majority of fraud allegations which, the authors say, is one reason why it's important to keep the Sarbanes-Oxley requirement that CEOs and CFOs certify reports to shareholders.

It also found that external auditors were participants in one out of five (21 per cent) cases of alleged financial statement fraud and that that at two-fifths of the firms where financial statement fraud allegedly took place, one or more directors was named as a participant in the fraudulent activities.

And the scary part? In most of the cases, the Securities and Exchange Commission sat on its hands and did nothing. According to the report, the SEC only acted in 44 per cent of cases.

The authors say this is a very good reason to ensure that class action securities fraud suits remain a vital mechanism for detecting and remedying financial statement fraud. They say any attempt to change that is misguided.