Screening Abnormal Market Activity for Potential Fraud Indicators

Jesper Sørensen ()

Chapter Chapter 9 in Shorting Fraud, 2025, pp 99-104 from Springer

Abstract: Abstract This chapter discusses market indicators of potential corporate fraud that can appear years, months, weeks, or days before a company collapses. These can include insiders selling shares, changes in short seller interest, blockholder activity, and unusual trading patterns among retail, professional, and institutional investors. Conflicts between the trading patterns of these groups can be a red flag, as can outlier stock price developments. Monitoring these indicators can help investors identify potential fraud and make informed investment decisions. Stakeholders and related parties with stakes in the company should be monitored for unusual activity. While some jurisdictions have strict regulations on insider trading, others do not, so it is important to be aware of the laws in the relevant jurisdiction.

Date: 2025
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DOI: 10.1007/978-3-031-81834-9_9

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