Securities Laws?

If there is a company who's CEO makes false statements about its well being to mislead investors. For Example: The statement is made that the Stock will rise and the company is in great shape despite orders being cancelled and the company failing. The CEO still makes statements that the company is going to be successful despite the facts. It is then revealed that the CEO had been faking orders to fake the financial well-being of the company. There is an accounting firm that has also certified the accounts during the entire time. The CEO states he has found a "silver bullett" to stay on top and maintains the firms well-being.

The firms stock then drops to 2.00 a share from 99.00 a share after the CEO's and Auditors lies have been revealed.
An independent investor owns 1,000.00 shares and believed the CEO's statements. He now wants to sue for his losses.

My Question is Exactly what federal securities laws have been violated here by both the CEO and Auditors?

Please HelP !!

You ask, "Exactly what federal securities laws have been violated here . . . ."

On the basis of the facts set forth, we shall assume that there is U.S. jurisdiction and that the corporation's stock is publicly issued. We shall address neither state law (e.g. "blue sky laws") nor common law (e.g. fraud), but we shall assume that the question requests cites to both criminal and civil law.

The two key federal acts are the Securities Act of 1933 and the Securities Exchange Act of 1934. Under the given facts, both are applicable to both the CEO and the auditors, as well as the corporation itself.

In their entirety, the given facts describe a horn-book violation of the Sarbanes-Oxley Act of 2002.

See the cites below for the statutory language and for information about the background and scope of these Acts.

Please re-post if you have additional questions or further information about the facts.

Hope this helps.

Click on this web site
http://www.wallstreetfollies.com/
scroll down to the diagram at the bottom of the page
click on that, and scroll down again

You will see info on a bunch of Wall Street Scandals that led to a flood of legislation to tighten up on Securities laws, and company responsibilities, where in some nations it might still be legal to do these kinds of things.

The reality is that many of the people's actions described above led to them going to jail, and getting sued, but legislators and the people felt that the laws penalties were not stiff enough, which led to the stricter accounting and auditing conflict of interest laws and more government paperwork to be filed by the companies.

What laws violated?
* Fraud
* Insider Trading
* Violating Fiduciary Responsibilities

The company is not the property of the CEO and auditors to do with as they please, but it is owned by stock holders, and investors, who are being cheated by this behavior.