Publicly traded stocks are important to an increasing number of Americans. People might have a stake in the stock market through their retirement accounts or they might use a little extra money to invest in a mutual fund or what might be a rising star company. The U.S. Securities and Exchange Commission, which oversees the public markets, puts it this way: “As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.”
Given the importance of market integrity, it was alarming to hear of two incidents of possibly fake corporate takeover bids using the Securities and Exchange Commission’s public database. One recent case involved Avon Products, and a prior incident involved the Rocky Mountain Chocolate Factory. It appears fake takeover bids might be intended to manipulate the market to benefit a handful of individuals at the expense of everyday investors. The idea of fraudulent conduct is troubling, especially in light of the relative ease in which a fake posting can be made.
I asked the chair of the agency for an account of how many fake documents have appeared in the database of publicly traded companies and what steps the agency takes to verify the accuracy of filings. The public securities markets are available to everyone, and they have to be protected from abuse.