Types of Financial Fraud

There are several types of financial fraud related to startups in the investment industry.

Here’s a list to consider:

Misrepresentations — fraudsters can lie about the value, risks, and costs of financial investments.

This also includes misrepresenting the financial condition and omitting key facts.

Regulatory violations — this includes securities law violations such as insider trading, or selling securities without a license.

This also includes failing to register securities.

IPO fraud — this includes misrepresentations in the offering of an IPO or SPAC by misstating accounting information or omitting key information.

Misappropriation of funds — this includes Ponzi schemes and skimming money for personal use.

Trading violations — this includes manipulating the market through pump and dump schemes and front running.

This also includes insider trading.

Cybersecurity fraud — this includes data breaches and protection of investor data.

Money laundering — this includes falsifying statements in accounting books and records.

Startups operating in the financial industry should watch out for this type of fraud.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.