Value manipulation refers to fraudulent schemes that involve the misstatement of the values of securities for the purposes of either inducing investors to continue to purchase the investment or to retain their investment position in the security.
The value of a security is material information to every investor. Thus, schemes to either withhold an investment’s value or to manipulate a securities value constitute fraud. Value manipulation is most common where securities are thinly traded or not traded at all on regular securities exchanges. Because the asset is not regularly traded, advisors and firms may be given authority to set the value of the securities. If the value set does not match the price that the asset could actually be currently sold at to an interested buyer the list value will be considered to be inflated.
Value manipulations are often the source of devastating investor losses because when the securities are eventually properly priced the decrease in value is swift and dramatic. Often times an investor may watch the value of their investment decline by 50% or more in a single day without any warning.
The valuation of securities is complex. It takes an experienced attorney to investigate and uncover pricing manipulation. Our attorneys have that experience. If you believe you have been a victim of fraud, contact the lawyers at Gana LLP.