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Common Financial Fraud Issues

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I think the most common issues we’re seeing is misrepresentations about what’s going on at the company but also lack of disclosures. Nondisclosures are sometimes the most significant issues. And I think when we start researching into the companies and we look at what was actually going on, it isn’t necessarily that the company meant to be making misrepresentation or not fully disclosing what was going on but it was just maybe just to address a short-term issue. But what happens then is that the markets don’t have an accurate understanding of what’s going on in the company, and in order for our markets to work, in order for our economy to work, we have to have predictable markets. And so that’s just one of the things that Congress has enacted various statutes, just to make sure that businesses are on a level playing field with each other and the markets have predictability.

I think a second area that we are frequently seeing is insider trading. You know, people see that in the newspaper headline, but basically all insider trading is is when someone who is within a company and has access to what we call material information, it’s just really important information that a normal investor would think was important, but they have the access to that information and they trade using that information when the market doesn’t yet know that information. And I think, you know, all of us in everyday life, we know what that is. I mean you go to a horse track, they don’t let you bet on yesterday’s race and it’s the same thing with insider trading, you can’t trade with information that the rest of the market doesn’t know.

Minneapolis mass tort and complex litigation attorney Carolyn Anderson discusses misrepresentations and nondisclosures are ripe for financial fraud.

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