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SEC Whistleblower Lawyer Blog

Articles Posted in Financial Fraud

Securities sales is a hard business on a good day. And the pressure to sell and hit a quota is often hanging over many agents’ heads. That’s even more true when there’s a downturned market filled with skittish investors. But “boiler rooms” are another thing entirely. Typically run out of call centers filled with unregistered sales agents, boiler room scams convince unwitting investors into pouring money into worthless investments. And while boiler rooms are an old con, they’ve been getting recent technology updates that have law enforcement around the world taking notice.  In fact, fraudsters don’t even need an actual boiler room. They work remotely, just as many of us do.  In March 2022, the Securities and Exchange Commission and Financial Industry Regulatory Authority (FINRA) worked with the Argentinian, Mexican, Panamanian, Colombia, Singaporean, Swiss, and other nations’ governments to bring down a boiler room operating out of Medellin, Colombia. Even the Royal Canadian Mounted Police were on the case.Securities sales is a hard business on a good day. And the pressure to sell and hit a quota is often hanging over many agents’ heads. That’s even more true when there’s a downturned market filled with skittish investors. But “boiler rooms” are another thing entirely. Typically run out of call centers filled with unregistered sales agents, boiler room scams convince unwitting investors into pouring money into worthless investments. And while boiler rooms are an old con, they’ve been getting recent technology updates that have law enforcement around the world taking notice. Continue reading

Financial fraud is a serious crime with heavy financial penalties and jail time. Yet people still try to mislead shareholders, bilking investors and destroying companies. Not every financial fraud case ends up on Netflix like biotech entrepreneur and Theranos founder Elizabeth Holmes. But many of the most notorious financial fraud cases are just as fascinating.  Enron  The Enron scandal is perhaps one of the best-known incidents of accounting fraud. Enron used accounting loopholes by using off-balance-sheet entities to hide billions in bad debt while simultaneously inflating its earnings. Shareholders lost more than $74 billion when its share price collapsed in the wake of the investigation. The CEO and former CEO were both sentenced to jail time, and the scandal led to Enron's bankruptcy and the dissolution of the accounting firm Arthur Andersen.Financial fraud is a serious crime with heavy financial penalties and jail time. Yet people still try to mislead shareholders, bilking investors and destroying companies. Not every financial fraud case ends up on Netflix like biotech entrepreneur and Theranos founder Elizabeth Holmes. But many of the most notorious financial fraud cases are just as fascinating. Continue reading

People often believe that audits can help root out fraud in cases and that an audit is a magic wand bestowing financial stability upon a company. But an audit is simply an independent examination of a company's financial statements to ensure that its financial records are a fair and accurate assessment of its transactions. An audit is ultimately only as good as the information given to the auditors. Of course, an auditor's responsibilities do include providing reasonable assurance that a company's financial statements are free from material misrepresentations due to error or fraud. Auditors aren't infallible and can miss problems without outside information. But an audit is a good first step toward identifying red flags in a company's financial statements. People often believe that audits can help root out fraud in cases and that an audit is a magic wand bestowing financial stability upon a company. But an audit is simply an independent examination of a company’s financial statements to ensure that its financial records are a fair and accurate assessment of its transactions. An audit is ultimately only as good as the information given to the auditors. Continue reading

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