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Finance Expert Witnesses in Securities Fraud Cases

Securities cases that involve fraud are complex and difficult to understand unless the individual has a background in these financial matters, so hiring a finance expert witness is often necessary to explain and detail the criminal aspect and why conviction or a legal remedy is important. Seeking either justice or compensation is one task of the finance professional.

What Is Securities Fraud?

There are numerous types of assets a company or person may have with business interactions. These may involve the stocks, bonds, investments and securities within an entity. The securities fraud usually refers to the illegal manner of convincing others to make an investment in a type of stock through false information. The stock may not truly exist, or the company may not have a positive revenue stream. The false information itself is usually sufficient in proving fraud as long as a claim or case involves the securities as well. Invalid or fake stock and fraud often occur together.

Securities Fraud and the Company

There are numerous businesses that possess stock, interest or financial investments. When a person comes along with a potentially successful investment opportunity, this may attract the attention of the owner
or management. The potential to earn a large return could become a cause for concern if the situation appears too good to be true. However, when there is evidence of the rate of return with the initial investment, the company may still take the opportunity. When the individual is actually engaging in fraud, the owner or manager may contact law enforcement or proceed through civil litigation to recover from the disaster.

Fraud and Securing Data

One reason that a finance expert is usually necessary for securities matters is from the unsecured data available to those engaging in fraud. The perpetrator of these crimes usually will use any piece of information from a company to his or her advantage. By convincing others to invest, he or she may also garner new data from the duped business to perpetuate his or her crimes. The individual may even use an investment bank to start the scheme and continue onto the other investments and stocks of multiple entities. The expert witness would need to unravel the confusion with these matters one activity at a time.

The professional may also need to engage the computer system of the company or look through numerous files and numbers in paperwork. The expert witness is often the only one in the case that fully understands the data and how it constituted a fraud crime with the company’s securities. Similar white-collar crimes require the expertise of a professional versed in these matters and that has extensive education in how to observe and see certain patterns. A lawyer consulting with securities professionals in addition to the knowledge from the expert could provide more insight into the crimes and how to unravel further confusion.

Background of Finance Expert Witness

When a professional takes on a case for securities fraud, he or she may work or have worked as a certified public accountant, as a financial consultant with a company or with business matters. A field of business specialization may also require knowing shareholder matters, disputes in a company, partnership arguments, creation and financial funding of entities, business sales, the merger or acquisition of an entity and credit matters. Analysis of these specific areas could increase awareness of how securities may increase the possibility of theft or fraud. Looking through accounts, taxes and related subject material, the expert may discover additional complications with the securities fraud.

Pursuing a Securities Fraud Case

Some experts will work with the prosecution in criminal cases of securities fraud while others will work with the plaintiff company against the perpetrator for a remedy to the situation. Many securities fraud cases may lack the means to reacquire the securities funding from stock that does not exist and where the criminal has no money to give back the investment. However, a remedy for keeping the person from working in the same industry in the future could help prevent additional crimes against other businesses. A successful outcome may also give the affected businesses other ways to recover.

The testimony supplied by the finance expert witness may explain away confusion in what security was part of the fraud case and how the person was able to steal from the business. A clear picture of the factors of the case is one goal of the professional hired for a securities fraud case.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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