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Stock Fraud

When Investers Are Defrauded, We Demand Answers & Accountability.

Houston Stock Fraud Attorney

What Is Stock Fraud?

Stock fraud occurs when corporations and corporate insiders prioritize profits over shareholder interests. By misleading shareholders, corporations put shareholder investments at risk.

Corporate stock fraud by misrepresentation occurs when investors or insiders:

  • Manipulate stock value by falsifying information on financial statements and SEC filings
  • Lying to corporate auditors
  • Through the public statements of misleading information.

Insider trading, another form of corporate stock fraud, is the trading of a corporation's stock or other security by corporate insiders such as officers, key employees, directors, or holders of more than 10% of shares. In illegal insider trading, an insider or a related party trades based on material non-public information obtained during the performance of the insider's duties at the corporation, or otherwise misappropriated.

Fraud involving corporate stock options is increasingly common. Stock options grant the holder the opportunity to buy stock a date in the future with the purchase price being fixed at the date the option is granted. If the stock's value increases before the purchase option is exercised, the holder profits from exercising their stock purchase option. Stock options fraud occurs when corporate executives backdate the granting of their stock options, virtually guaranteeing a profit as soon as the option is granted. This manipulation is unfair and defrauds other shareholders.

Data Theft Costs Investors Billions

From 2017 to 2018, hackers committed serious data breaches at Facebook, Paypal, and other major databases of private information. These breaches were often followed by admissions of "guilt," or varied admissions that the company's security was not as robust as they promised.

Those announcements usually occur alongside precipitous drops in stock value. For instance, Facebook's data scandal involving Cambridge Analytica, who weaponized user data for political reasons, led to a loss of over $100 billion through the course of the scandal.

Data Breaches May Count as Stock Fraud

Plaintiffs have brought more cases forward that claim data breaches as a form of securities fraud. But how can that be?

Their argument relies on the relationship between a data company's security and it's stock value. The more secure a platform is, the higher its value as a company–especially in today's data-driven world. If a company presents its security as more robust than it really is, then they're essentially inflating the value of their stock artificially, which is why data breaches are followed by massive losses.

Will it work?

That remains to be seen. Very few of these companies have subjected themselves to a regulatory investigation, making it difficult to prove that the security issues were a known issue prior to the breach. Plaintiffs would need evidence that the company deceived the public when presenting itself as secure, which would make investors able to claim stock fraud. In legal terms, that's known as "scienter," or the knowledge of wrongdoing. That would require confidential witness allegations or the findings from a regulatory investigation, which (as we mentioned) is rare—for now.

However, cases like these prove that stock fraud is rarely straightforward–proving your case will require a deft and experienced lawyer at the wheel and a well-funded investigative team behind them. That's why many of our clients called us in the first place.

Contact a Stock Fraud Lawyer in Houston, TX

At Arnold & Itkin LLP, our Houston business attorneys fight aggressively for the rights of our clients. If you have been a victim of stock fraud perpetrated by officers, shareholders, directors, or other company insiders, you have rights. We can help you recover losses from the corporate fraudsters who are responsible.

Show the other side they won't get away without a fight. We've secured billions for clients by holding dishonest parties accountable. Call Arnold & Itkin at (888) 493-1629 today.

Case Results

Check Out Our Victories

  • $8 Billion Top 3 Largest Jury Verdict in U.S. History Arnold & Itkin LLP tried a Risperdal case against Johnson & Johnson for failing to warn about one of the drug’s most damaging side effects: gynecomastia. Our skill, hard work, and dedication resulted in the third-largest jury verdict ever obtained ...
  • $357 Million Largest Workplace Accident Settlement in Texas history Arnold & Itkin LLP secured a massive nine-figure settlement against a transnational corporation for a workplace incident. The settlement set a Texas record for being the largest personal injury settlement in the state’s history.
  • $205 Million Confidential Settlement Obtained for Numerous Clients Arnold & Itkin reached a record $205,000,000 settlement on behalf of clients after several years of hard-fought litigation. The case settled just before trial was set to begin.
  • $171 Million One of the Largest Confidential Settlements in History Arnold & Itkin worked over the course of several years to represent clients in a case that many other law firms turned down. In the end, we were able to obtain a record-setting confidential settlement of $171 million.
  • $117 Million Largest Single-Event Personal Injury Verdict in Louisiana History Arnold & Itkin represented a pregnant woman who experienced stomach pain and called Acadian Ambulance. The driver of the ambulance drove the ambulance into the back of a sugar cane truck causing the plaintiff's spine to be severed at T4 and for her ...
  • $116 Million Confidential Settlement Arnold & Itkin LLP negotiated a massive nine figure settlement on behalf of their clients after several years of hard fought litigation.
  • $110 Million Record Settlement Achieved for Victims of Defective Products Arnold & Itkin obtained a record settlement for individuals harmed by defective, dangerous products. The result exemplifies our commitment to clients and justice for those seriously injured by the conduct of others.
  • $105 Million Record Settlement for Dangerous Product Victims Arnold & Itkin’s legal team helped represent those harmed by dangerous products. We were successful in recovering a $105 million settlement.
  • $97 Million Massive Settlement Secured for Refinery Workers Arnold & Itkin is proud to share that after months of preparation for trial, our firm was able to secure a huge settlement for clients who were injured in a refinery fire. Find out more now.
  • $92.7 Million Record Settlement for Burn Injury Victim Arnold & Itkin LLP secured a substantial settlement for a man who suffered severe burns in an accident at his job. The settlement set a new record statewide for workers with similar injuries.
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“They really weren’t afraid to take them on. I think that’s why they had the outcome that they had. They really weren’t afraid. They told us they were going to take them on. They did!”
Raquel Workplace Explosion Victim

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