Bankrupt Cos. Likely Fraud Probe Targets: Study

Law360, New York (November 24, 2008, 12:00 AM EST) -- Companies under bankruptcy protection are more than three times as likely as nonbankrupt companies to be the target of U.S. Securities and Exchange Commission enforcement actions for alleged fraud, according to a recent study by a financial advisory firm.

In the study, published Monday by the Deloitte Forensic Center, analysts reviewed more than 500 corporate bankruptcy filings between 2000 and 2005 and thousands of SEC enforcement actions issued between 2000 and 2007, arriving at a strong correlation between bankruptcy and accounting fraud allegations.

The results of...
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