If there is a company who's CEO makes false statements about its well being to mislead investors. For Example: The statement is made that the Stock will rise and the company is in great shape despite orders being cancelled and the company failing. The CEO still makes statements that the company is going to be successful despite the facts. It is then revealed that the CEO had been faking orders to fake the financial well-being of the company. There is an accounting firm that has also certified the accounts during the entire time. The CEO states he has found a "silver bullett" to stay on top and maintains the firms well-being.
The firms stock then drops to 2.00 a share from 99.00 a share after the CEO's and Auditors lies have been revealed.
An independent investor owns 1,000.00 shares and believed the CEO's statements. He now wants to sue for his losses.
My Question is Exactly what federal securities laws have been violated here by both the CEO and Auditors?
Please HelP !!
2007-10-27 15:06:34 · 3 answers · asked by M_E_M_P_H_I_S 1 in Business & Finance ➔ Personal Finance
You ask, "Exactly what federal securities laws have been violated here . . . ."
On the basis of the facts set forth, we shall assume that there is U.S. jurisdiction and that the corporation's stock is publicly issued. We shall address neither state law (e.g. "blue sky laws") nor common law (e.g. fraud), but we shall assume that the question requests cites to both criminal and civil law.
The two key federal acts are the Securities Act of 1933 and the Securities Exchange Act of 1934. Under the given facts, both are applicable to both the CEO and the auditors, as well as the corporation itself.
In their entirety, the given facts describe a horn-book violation of the Sarbanes-Oxley Act of 2002.
See the cites below for the statutory language and for information about the background and scope of these Acts.
Please re-post if you have additional questions or further information about the facts.
Hope this helps.
2007-10-29 06:35:23 · answer #1 · answered by Tim F 5 · 0⤊ 0⤋
Breach of fiduciary duty, and securities fraud (overstating the value of the underlying security by fraudulently misrepresenting its worth in public communications)...
2007-10-31 13:11:42 · answer #2 · answered by I Can Count To Potato 7 · 0⤊ 0⤋
I have to wonder if you are an ex-Enron employee. Your scenario sounds very familiar, and we all know how THAT turned out.
2007-10-27 15:26:27 · answer #3 · answered by acermill 7 · 0⤊ 0⤋