No, it is still fraud, even if your fraudelent actions ended up making the investors/company money. And it will land you in prison.
This is exactly what Martin Shkreli spent his time in prison for (and not for anything related to Daraprim drug price increases, despite what some people apparently believe, as I discovered).
TLDR (with a great deal of oversimplification): he ran a hedge fund (MSMB) and was lying to investors about how much money the fund had and about the investment strategies. He then started a pharma company called Retrophin and used some of his equity in Retrophin to compensate the MSMB investors for their losses (without their knowledge, i.e., basically the exact same issue with lying about investment strategies to investors he had earlier). It just so happened that Retrophin ended up performing fairly well at the time, and that equity actually ended up making profit for those investors overall.
Investors/company making money in the end is not a valid defense against fraud charges. If a hedge fund manager or a CEO cashes out the investor/company accounts in secret, goes to Vegas to place it all on red, makes a gain, and then puts it back into the investor/company account, it is still a crime. Despite the fact that the investors/company made money in the end, I don’t think it is wrong to call this a fraudelent move.
However, the wheels of justice tend to be slow, and it might take some time for the consequences to catch up. Those fraudelent actions on Shkreli’s part were taken around 2012-2013, the investigation was opened in 2015, and he got convicted in 2017.
filoleg|5 months ago
This is exactly what Martin Shkreli spent his time in prison for (and not for anything related to Daraprim drug price increases, despite what some people apparently believe, as I discovered).
TLDR (with a great deal of oversimplification): he ran a hedge fund (MSMB) and was lying to investors about how much money the fund had and about the investment strategies. He then started a pharma company called Retrophin and used some of his equity in Retrophin to compensate the MSMB investors for their losses (without their knowledge, i.e., basically the exact same issue with lying about investment strategies to investors he had earlier). It just so happened that Retrophin ended up performing fairly well at the time, and that equity actually ended up making profit for those investors overall.
Investors/company making money in the end is not a valid defense against fraud charges. If a hedge fund manager or a CEO cashes out the investor/company accounts in secret, goes to Vegas to place it all on red, makes a gain, and then puts it back into the investor/company account, it is still a crime. Despite the fact that the investors/company made money in the end, I don’t think it is wrong to call this a fraudelent move.
However, the wheels of justice tend to be slow, and it might take some time for the consequences to catch up. Those fraudelent actions on Shkreli’s part were taken around 2012-2013, the investigation was opened in 2015, and he got convicted in 2017.
ekjhgkejhgk|5 months ago