One of the most important tasks of the company’s accountants is called due diligence. Each economic organization publishes in its financial statements a complete picture of the company’s accounting activities. Also, a full disclosure of material facts about its economical position, material engagements and securities details. Hiding details may lead to deception as in the Alpha Capital Anstalt fraud case against Arista Power.
Full Transparency is Crucial.
Even a person who is making medical insurance, is required to declare proper disclosure in connection with his health condition. Everyone understands, even without being a lawyer, that the data we provided will be checked and any fact that has not been stated will be a justifiable reason for canceling the insurance. The same is true in business.
When Alpha Capital Anstalt examines a business for investment, it expects true and transparent due diligence. Obviously, the facts are not always pleasant.
More than once Alpha Capital Anstalt, a very successful institutional investing company, has invested in companies that have failed financially. As long as it has faith in their product. It does not shy away from entering business with financially troubled companies. Obviously, because of the need for capital investment, they offered their idea for sale in the first place. But raising money is not a reason for fraud.
Telling the Truth is Fundamental.
Alpha Capital Anstalt fraud allegations came before the court due to false disclosure. Arista was a startup company from New York that was looking for funding for its projects. The company developed an efficient and cost-effective co-generation power system that harnesses various energy sources such as wind, solar, and others into one device, suitable for both residential and commercial buildings.
The Company sold options in private sale shares held by a family member of the Company’s advisor. In this way, they raised about a million dollars.
At the same time, they continued to raise public capital while hiding the private share deal. The company presented a lacking due diligence, leading to Alpha Capital Anstalt fraud lawsuit. Two years later Arista filed for bankruptcy. The investor’s money went down the drain.