Legal representation in Pittsburgh, Pennsylvania

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Avoiding claims surrounding securities fraud

On Behalf of | Jul 20, 2020 | Civil Litigation |

Most entrepreneurs take pride in their businesses, especially as their company grows in size and success. However, certain allegations take away that pride and crumple it into the ground, including security fraud claims.

What is security fraud? Essentially, it’s when a business commits dishonest and illegal acts that result in financial gain – specifically lying to investors to influence specific decisions. It’s a challenging allegation because it usually comes from disgruntled investors or influencers in your business.

Security against security fraud claims

It begs the question about how business owners can avoid these allegations and ultimately protect their businesses:

  • Build anti-fraud culture into your company policy – it’s cortical that you incorporate the right corporate culture into your business from the beginning. Encourage employees to report fraud, or you have to discourage fraudulent behaviors to advance their careers.
  • Offer audits for internal and external use – transparency is key for most investors. They want to be able to trust the company and owners they invest in, so offering audits allow you to stay transparent and avoid any potential claims in the future.
  • Review management consistently – you can use independent committees to review your company’s management practices and ensure you are following the proper protocols to prevent any possibility of fraud or misrepresentation to your investors.
  • Hire the right employees – one of the best measures that employers can take is to hire the right employees, especially those who will not commit fraud. You will need to conduct background checks, credit reports and even social media audits. A thorough check allows you to ensure you are bringing the right team to your company.

Enforcing a strong anti-fraud culture will protect you in your company’s future, but it won’t guarantee there won’t be allegations. If you are concerned, make sure to collect evidence and prove you follow protocol throughout all your business practices.