Capital Fraud

Capital fraud most often involves the dissemination of false documentation related to securities trading or the concealment of relevant information about the offeror’s assets. We speak of capital fraud only when the perpetrator knows that the information he provides is false. Polish regulations protect potential buyers in this regard, who have the right to make decisions on the basis of information that is consistent with reality. The existence and protection of whistleblowers is also an important element of capital market protection.

Capital fraud can be committed by action (announcement of false data) or by omission (concealment of certain information). The decisive factor is the effect of disseminating false information that materially affects the offer of property rights. The form of dissemination of this information is irrelevant to the existence of the crime.

The most common perpetrators of this type of crime are:

• persons acting on behalf of the issuer or responsible for maintaining its accounts;
• persons acting on behalf of an entity that places securities on the market;
• persons acting on behalf of the dominant entity in the issuer’s capital structure,
• persons acting on behalf of an entity preparing a prospectus or auditing the issuer’s financial statements.

Polish legislation provides for a penalty of up to 5 years’ imprisonment for committing capital fraud. In addition, the perpetrator can expect a ban on holding positions in the bodies of commercial law companies or a ban on conducting certain types of business activities. The practice of the Polish judiciary shows that detention on remand and precautionary measures related to blocking a bank account are increasingly used in capital fraud cases.

In the field of capital fraud, the KKZ Law Firm provides:

• full preventive legal care, including implementation of internal regulations and compliance policies to prevent violations;
• crisis response counseling, including development of a strategy of action and a possible line of defense;
• representation of victims before law enforcement agencies – drafting of a crime notification, participation in procedural activities and contacts with judicial authorities at every stage of preparatory and judicial proceedings;
• handling internal channels of whistleblower notifications;
• conducting internal compliance audits, internal investigations, preparing reports with detected irregularities and recommendations for changes;
• conducting internal training for employees, executives and board members on the practical aspects of compliance – preventing, responding to and defending against the possibility of capital fraud.

Our offer is addressed to:

• members of corporate and partnership bodies;
• business owners;
• whistleblowers;
• companies involved in securities trading;
• victims of capital fraud.