Corporate fraud continues to be one of the FBI’s highest criminal priorities—in addition to causing significant financial losses to investors, corporate fraud has the potential to cause immeasurable damage to the U.S. economy and investor confidence. As the lead agency investigating corporate fraud, the Bureau focuses its efforts on cases that involve accounting schemes, self-dealing by corporate executives, and obstruction of justice.
The majority of corporate fraud cases pursued by the FBI involve accounting schemes designed to deceive investors, auditors, and analysts about the true financial condition of a corporation or business entity. Through the manipulation of financial data, the share price, or other valuation measurements of a corporation, financial performance may remain artificially inflated based on fictitious performance indicators provided to the investing public.
The FBI’s corporate fraud investigations primarily focus on the following activities:
- Falsification of financial information
- False accounting entries and/or misrepresentations of financial condition;
- Fraudulent trades designed to inflate profits or hide losses; and
- Illicit transactions designed to evade regulatory oversight.
- Self-dealing by corporate insiders
- Insider trading (trading based on material, non-public information);
- Misuse of corporate property for personal gain; and
- Individual tax violations related to self-dealing.
- Fraud in connection with an otherwise legitimately operated mutual hedge fund
- Late trading;
- Certain market timing schemes; and
- Falsification of net asset values.
- Obstruction of justice designed to conceal any of the above-noted types of criminal conduct, particularly when the obstruction impedes the inquiries of the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), other regulatory agencies, and/or law enforcement agencies.
The FBI has formed partnerships with numerous agencies to capitalize on their experience in specific areas such as securities, taxes, pensions, energy, and commodities. The Bureau has placed greater emphasis on investigating allegations of these frauds by working closely with the SEC, CFTC, Financial Industry Regulatory Authority, Internal Revenue Service, Department of Labor, Federal Energy Regulatory Commission, and the U.S. Postal Inspection Service.
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