This article analyzes the novel securities fraud theory of “price fraud.” Under this theory, an issuer and an … underwriter are potentially subject to securities fraud liability for knowingly setting the offering price of securities at a … level that is not rationally related to the securities' fundamental value. The potential for price fraud liability could …

seemingly innocuous transgressions may lead to accounting fraud …

Using a panel of mandatory SEC disclosure filings we test the predictability of investment fraud. We find that past … changes in SEC disclosure policy that increase investors' ability to detect fraud at minimal cost … regulatory and legal violations, conflicts of interest, and monitoring, are significantly associated with future fraud. Avoiding …