The marketplace is where the seller supply meets the buyer demand; it is also where stock prices are determined. However, Investopedia notes that there is no exact nor clean equation to determine how a stock price will behave. That’s because stock prices are affected by a variety of different factors, and one of which is white-collar crimes.
If you know of anyone who has been on the receiving end of white-collar crimes, then it might be best to get the services of a white-collar crime attorney.
What Is the Definition of a White-Collar Crime?
White-collar crime is a nonviolent crime that is financially motivated and is committed by businesses as well as government professionals. It is more accurately called corporate crime. Some of the typical white-collar crimes are the following:
- Fraud
- Wage theft
- Insider trading
- Embezzlement
- Federal Computer Crimes
- Cybercrime
- Copyright infringement
- Money laundering
There are white-collar crime attorneys that specialize in these types of cases. These crimes can become a general term used for several crimes. Modern criminology has, therefore, come up with a classification based on the type of crime as well as the topic.
There are three types, namely:
- Offense type – This includes crimes that are related to property, the economy, and other corporate crimes like health and safety law violations and environmental crimes.
- Offender type – The identifying factors include the offender’s social class, their high socioeconomic status, academic qualification, their profession, or their position of trust.
- Organizational culture – This is defined in a two-fold manner:
- Occupational crimes: Crimes that are motivated by personal interests such as overcharging, manipulating of records, etc.
- Organizational or corporate crimes: Crimes committed by business executives to benefit their company, e.g., price-fixing, false advertising, etc.
There may be different types of white-collar crimes, but an experienced white-collar crime attorney should be able to defend you in any of these cases properly.
How it correlates with Stock Price Performance
As mentioned earlier, the stock price performance is affected by different factors, including white-collar crimes. To further illustrate it, below are some cases that are clear examples of how white-collar crimes correlate with stock price performance.
- John Babikian of awesomepennystocks.com – According to reports, Babikian was responsible for $3 billion in losses for investors all around North America as well as other parts of the world through his stock promotion website called Awesome Penny Stocks. The website has since been shut down after much pressure from law enforcement. Babikian allegedly used pump-and-dump schemes to gain profit.
- Jordan Ross Belfort – He is one of the most famous offenders when it comes to stock-market manipulation. He was found guilty of fraud and crimes which are in connection with stock-market manipulation back in 1999. He has since become an author and a motivational speaker. In fact, his memoir entitled The Wolf of Wall Street was even adapted into a film with the same name.
- Martha Stewart – In 2004, well-known TV personality Martha Stewart was charged with conspiracy, obstruction of justice and securities fraud. This was in relation to her using insider information regarding a negative FDA ruling about ImClone Systems. She sold her shares before any news about the negative FDA ruling became public. This lead to her dodging a loss while other investors suffered from the company’s stock prices dropping at 16%. With her team of legal advisers’ help, she served five months in prison as well as a house arrest and probation.
The cases above show how white-collar crimes can affect the performance of stock prices. For these types of legal situations, a reputable and experienced white-collar crime attorney can help someone overcome the case.
How the Government Can Control It
The Federal Bureau of Investigation acknowledges that white-collar crimes could continue to grow. That’s why the FBI has been working hand-in-hand with various law enforcement agencies, international partners as well as regulatory agencies like the Securities and Exchange Commission and the U.S. Attorney’s Offices, among others, to control white-collar crimes. They have set up various task forces like the Financial Fraud Enforcement Task Force, which collaborates with the Department of Justice in order to stop large-scale criminal enterprises.
White-collar crimes have a significant impact on the US economy, more than $300 billion a year if you put a number on it. That goes to show how grave of a crime it is and that an experienced white-collar crime attorney is strongly needed to combat this problem.
