Fraud on the Market

Fraud on the Market is a legal theory in securities law suggesting that when a company makes false or misleading statements, those inaccuracies can inflate or deflate its stock price. Because investors rely on public information to make buying or selling decisions, they may unknowingly trade based on this misinformation. The concept argues that this market manipulation affects all shareholders, as it disrupts the fair functioning of the market. Thus, investors may seek legal recourse to recover losses incurred due to this fraudulent information influencing their investment choices.