Are We Headed for a Period of Increased Corporate Financial Fraud?
- posted: Jul. 18, 2023
- Fraud
As many Americans have noticed, financial conditions are getting worse across the board—including for corporations. As profits go down and interest rates go up, more corporate executives may be tempted to cheat in order to cover up bad financial situations. Historically, the longer financial conditions remain tough, the higher the risk that companies will engage in financial fraud.
If fraud goes up, will enforcement go up too?
Financial fraud will likely be more prevalent the longer the financial market falls below expectations. How equipped is the federal government to investigate and prosecute? During the Trump administration, we saw record-low rates of fraud enforcement. Over the last year, enforcement has gone up—but the government may not have sufficient resources to ferret out all instances of fraud.
However, legal and accounting scholars have suggested that enforcement is critical to protect consumers and investors, as well as deterring businesses from continuing to use deceptive business practices. Others suggest that the problem is calling fraud “failure to disclose,” which only results in a fine, as opposed to fraud, which results in larger fines and jail time.
Under our current financial conditions, we can expect to see more fraud enforcement from the government, but they are unlikely to catch every single company fudging the numbers. That’s where whistleblowers can help.
Blowing the whistle on corporate financial fraud
Employees and former employees can play a key role in uncovering financial fraud. Whistleblower protections allow people to report wrongdoing without fear of retaliation. If successful, whistleblowers are also often entitled to a portion of the funds recovered by the government.
If you’ve noticed accounting issues or other evidence of fraud at your workplace, you may be eligible to file a whistleblower claim. A seasoned whistleblower attorney at Kardell Law Group can guide you through the process. Call today for a consultation.
