October 3, 2019
The Department of Justice has aggressively targeted valuation or “mismarking” fraud in a number of indictments brought within the last few years. In this article, I discuss the Department’s efforts to expand its mismarking inquiries beyond stocks and bonds, highlight recent cases which illuminate the increasing need for robust internal controls designed to eliminate the incentives for an employee or manager to overvalue assets, and conclude that the defense of these cases will likely depend upon the ability of the defendants to discredit the cooperating witnesses while demonstrating that they acted in complete good faith.