Bre-X Minerals, a Canadian company, got involved in one of the largest stock frauds in history. Its stock price skyrocketed to a high of $280 (split adjusted) after its Indonesian gold property, which was said to contain more than 200 million ounces, was reported to be the richest gold mine ever. Not only did Bre-X Minerals have a market capitalization of $4.4 billion during its peak, but many ordinary individuals also became millionaires overnight because of it.
Bre-X Minerals’ stock price, however, plummeted to just some pennies on March 19, 1997, after its gold mine was proven to be fraudulent. But though this Canadian company made many a million richer, it also caused losses to a number of organizations, like the Ontario Municipal Employees’ Retirement Board, which lost $45 million, the Quebec public sector pension fund, which lost $70 million, and the Ontario Teachers’ Pension Plan, which lost $100 million.
Enron was another of the biggest stock scams of all time. This Houston-based energy trading company was identified to be the seventh largest company in the U.S., based on its revenue. But what Enron actually did was fool investors and analysts into thinking it was stable by resorting to complicated accounting practices to keep hundreds of millions worth of debt off its books. Besides this, the shell companies that Enron executives managed recorded fictitious revenues by recording one dollar of revenue, multiple times – this created the appearance of incredible profits.
In 1992, the illegal practices employed by Enron were discovered, putting an end to its fraud; this caused its share price to dive from $90 to less than 70 cents, but not before it took down with it Arthur Andersen, the fifth leading accounting firm in the world at the time.
Stock market attorneys know that investments may help you achieve your long-term financial goals because investing opens the possibility of a benefit in the future; this cash benefit is called “return.” Most people have heard of stocks and bonds, but these are just two of the many different ways you can invest your money.
Most first-time investors work with a financial adviser or stockbroker to understand what types of investments are suitable for their objectives, risk tolerance level, and financial needs. Understanding which investments are available will help you choose the correct ones for your account and develop a healthy, diversified portfolio.
As mentioned above, one form of investment is buying stocks. When you invest in a stock, you share ownership with a corporation. The success or failure of the company determines whether you lose or make money on a stock. Other factors also affect your stock investment, such as what type of stock you own and the stock market’s performance as a whole. There are two kinds of stock: common and preferred. Publicly traded companies issue common stock, where stockholders’ share prices rise and fall with the company. Some companies issue preferred stock, which exposes clients to less risk of loss but also less potential for returns.
Risk of loss, however, will never be eliminated once fraudsters enter into the picture. This can only result to stock fraud. Stock fraud, also known as securities fraud, refers to any form of deceptive practice in the stock or commodities markets that encourages investors to make purchase or sale decisions based on false information. Aside from being an act in violation of securities laws, this also frequently results in losses for investors.
Stock fraud include stock manipulation, outright theft from investors (embezzlement by stockbrokers), lying to corporate auditors and misstatements on a public company’s financial reports.
When financial adviser or stockbroker misconduct or deceit results in investor financial losses, victims need a high-quality attorney they can rely on for representation. He/She may be able to help them determine if they can be entitled to damages resulting from their losses.