IPO Securities Lawsuits & Litigation

Free Case Evaluation

When laws are broken regarding an IPO it can result in IPO litigation.

An IPO, which is an abbreviation for initial public offering, is the first sale of stock by a company that goes public. Public companies have a relatively small group of investors or shareholders, but a public company can have shares purchased by anyone in the public.

Going public means a company is publicly traded and the initial trading is the IPO.

Unfortunately, there can be a number of schemes linked to going public, especially during the pre-IPO phase.

What are Some Examples of a Pre-IPO Scam?

  • Selling shares of an IPO without the authority to do so. For instance, if someone sells shares he or she does not actually own, it would be considered embezzling.
  • Selling shares for a company during pre-IPO that do not exist or that never go public. It’s also a crime to sell shares of a company that is going public, but in fact, that company does not exist.
  • Selling unregistered securities. If a company wants to go public they need to register with the SEC or at least qualify for an exemption. Selling unregistered securities is illegal, but it’s one of the most common forms of pre-IPO scams.

Why Go Public?

A public company raises a lot of money for the company, which allows for it to expand. Private companies have the ability to expand, but they must borrow capital, find more investors privately, or be purchased by another company.

IPO allows a company to raise a significant amount of money quickly, which is why so many companies choose to do it. They give up some control of their business and obligate themselves to a large group of shareholders and the regulations of the stock market, but they are able to gain the funds needed to achieve their goals quickly.

Additionally, it makes it easier for companies to raise funds long-term and allows investors to more easily sell their shares and make money. Shares are given a value during the IPO and anyone who owns shares can easily sell those shares or purchase more. Companies that are public are also able to offer a variety of attractive benefits, include employee stock ownership plans.

Understanding how an IPO works and knowing what to expect can help understand why laws are sometimes broken in relation to a company going public. One of the most common problems with a company going public occurs during the pre-IPO when there is increased risk for frauds and scams.

Why Might You Need an IPO Litigation Lawyer?

If crimes are committed during a pre-IPO or at any phase of a company going public, anyone affected should consider working with an IPO litigation lawyer.

During the pre-IPO, companies make shares available to certain investors only. It’s an expansion of a private offering, but not yet as broad as the full public offering. Often, large private equity funds or hedge funds purchase shares during the pre-IPO. This is perfectly legal in general and there are a number of opportunities that occur during this time that can allow a company to raise funds legally.

The pre-IPO phase is also a time when there is a high risk for fraud. Any misrepresentation or schemes connected to the sale of securities are considered federal crimes and will be charged as such. Efforts will also be made to compensate those affected. If you or someone you know was affected by a pre-IPO scheme or you believe fraud occurred in relation to an IPO at any time, an attorney can help you determine how to proceed.

Any form of IPO fraud is a crime and includes all attempts to mislead in relation to a company going public. These frauds can be perpetrated by large banks during the underwriting phase or by the company itself. For instance, if a company misleads investors about its financial condition prior to the IPO, it would be committing IPO fraud. Going public requires a company disclose all of its financial information, and providing any false or misleading information is a crime.

How Might an IPO Litigation Attorney Help?

IPO fraud is a serious crime. If you believe you know of a case of IPO fraud or you have been affected by IPO fraud, it’s important to contact an IPO litigation attorney who is familiar with securities fraud. These crimes not only affect the specific victims they also damage investor trust, which is why the SEC takes these issues so seriously.

If you suspect wrongdoing related to an IPO or you believe IPO fraud cost you money, contact us to discuss your case.


Since its establishment in 1999, Seeger Weiss has led some of the most complex and high-profile litigations in the U.S.