4 ms·

Would it have been fraud if they disclosed it to the investors? Ie is going into a store and buying your product to create an illusion of demand, by itself a cr

• troydavis 8y ago
  No. It might have violated their contracts with retailers, but any recourse from that would have been civil, not criminal. An interesting question is how long it’s material for. Clearly it’s material while it’s a meaningful portion of their total revenue or per-store sales. There’s an argument that buying your own product is material long after real revenue has grown, though, because it’s likely to have an impact if publicly discovered. Basically it becomes a skeleton in the closet, and as long as that skeleton is (a) known to the company and (b) newsworthy (and thus likely to impact the company’s perception and valuation), there’s an least an argument it still needs to be disclosed.