What's Being Done About Securities Fraud in NYC?
Are businesses selling us short?
on February 6, 2018
Updated on January 27, 2023
When corporate ethics have a run-in with the law, such as in securities fraud, the damage isn’t restricted to the boardroom.

Some Email Jokes Are Funnier Than Others
“Many of the matters we’ve been handling the past few years arose out of the financial crisis we just lived through,” says Daniel J. Kramer of Paul, Weiss, Rifkind, Wharton & Garrison in New York. “These are challenging questions and complicated markets. It’s an exciting time.”
Technology makes it even more exciting.
Fraud-on-the-Market Theory
Today, interpretation of that securities law is dominated by court rulings from the 1970s and 1980s, including Basic v. Levinson Inc. (1988), which established the fraud-on-the-market theory. It asserts that investors count on the trustworthiness of the market as a whole, and in an efficient market, securities prices will rely on all publicly available information from a company. So if a company puts out misleading statements about itself, it will distort prices.
Since the mid-1990s, however, various rules and laws have tightened the circumstances under which plaintiffs can pursue securities fraud lawsuits.
Risks in Bringing a Lawsuit
Investors who think their stock prices have dropped suspiciously should seek out a law firm and the advice of an attorney who specializes in securities litigation. For more information about this area, read our securities and corporate finance law overview. They should also be aware of the risks:
- Opposing counsel has the right to go through the plaintiffs’ email, phone and other records.
- Most cases are painstaking endeavors that take two to five years.
- There’s no guarantee of seeing a cent even if you win (the company might declare bankruptcy, for example).
As for avoiding the other side of the courtroom in a securities-fraud trial? Much simpler.
“Don’t take the tip,” says Fink.
Search Articles
Other Featured Articles
Can an Investment Broker's Record be Expunged in California?
What securities law says about getting rid of petty crimes and complaints
How Does a Private Investment in Public Equity Work?
A legal overview of the discount investment purchase methodA legal overview of the discount investment purchase method
Deciding Between Debt or Equity Securities Financing in Oregon
What you need to know about each type of offering