Other Effects of Securities Fraud
Even if the effect of securities fraud is not enough to cause bankruptcy, a lesser level can wipe out holders of common stock because of the leverage of value of shares upon the difference between assets and liabilities. Such fraud has been known as watered stock, analogous to the practice of force-feeding livestock great amounts of water to inflate their weight before sale to dealers.
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Famous quotes containing the words effects and/or fraud:
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—Andrew Jackson (1767–1845)
“There exists in a great part of the Northern people a gloomy diffidence in the moral character of the government. On the broaching of this question, as general expression of despondency, of disbelief that any good will accrue from a remonstrance on an act of fraud and robbery, appeared in those men to whom we naturally turn for aid and counsel. Will the American government steal? Will it lie? Will it kill?—We ask triumphantly.”
—Ralph Waldo Emerson (1803–1882)