Shareholder
Fraud
 |
Learn about securities fraud lawsuits, shareholder fraud, and corporate fraud! |
| Home |
| Shareholder Fraud information |
| Shareholder Fraud attorneys |
| law resources |
| Contact Us |
| About Shareholder Fraud InfoCenter |
| Shareholder Fraud InfoCenter is an Internet resource that offers you an opportunity to research shareholder fraud and your legal rights associated with shareholder fraud. Shareholder Fraud InfoCenter does not offer legal advice or referrals. |
| Shareholder Fraud Information |
Shareholder FraudWhat is shareholder fraud or corporate fraud? Shareholder fraud occurs when the employees of a corporation deliberately deceive the company’s shareholders by misrepresenting information. Fraud includes activities such as doctoring account books and exaggerating claims about products or services. When these illegal actions result in a drop in stock value, the shareholders can file suit for the money they have lost. There have been several high-profile examples of shareholder fraud in recent years. Among them are those within WorldCom, Enron, and Tyco. WorldCom Fraud Scandal Over the course of more than two years, WorldCom employees mislabeled transactions and changed dates to give investors the impression of growth while the company was floundering financially. One key example surrounded ‘line costs’ – money paid to local phone companies for long distance connection. WorldCom executives classified these profit-deficient agreements as ‘long-term investments’ so that they would not affect the bottom line. The company was forced to file for bankruptcy in July after this erroneous accounting was discovered; total discrepancies have reached over $9 billion since then. Four former WorldCom executives have pled guilty to criminal charges. The Securities and Exchange Commission partially settled a civil case against WorldCom for an undisclosed fine along with the company’s agreement to continued oversight of their actions. Enron Fraud Scandal The biggest corporate collapse in recent history was due to deeply entrenched fraud. The undoing of Enron can in large part be attributed to a number of off-the-balance-sheet partnerships, risky transactions, and inaccurate accounting methods. Former top executives at Enron have been accused (and in some cases convicted) of engaging in mail, wire, and securities fraud as well as money laundering and conspiracy. In addition, Enron’s accounting firm, Arthur Anderson, LLP, has been convicted of obstruction of justice. As a result of Enron’s collapse, employees and shareholders have suffered tremendous financial losses. Tyco Fraud Scandal Three former top executives at Tyco International, Ltd. have been indicted on charges of civil fraud and the theft of over $600 million. Former CEO L. Dennis Kozlowski, former chief financial officer Mark Schwartz, and former general counsel Mark Belnick are accused of issuing themselves loans with company money in order to make extravagant personal purchases. The former CEO and CFO are also accused of issuing bonuses to themselves and other employees who had borrowed money from the company. The bonuses acted as de facto loan repayment. Finally, all three men are accused of selling their own Tyco stock without informing the board of directors, as they were required to do under Securities and Exchange Commission (SEC) rules. They have all pled innocent. |