Private Company Fraud

76 Pages Posted: 21 Feb 2020 Last revised: 30 Aug 2021

See all articles by Verity Winship

Verity Winship

University of Illinois College of Law

Date Written: February 14, 2020


Fewer companies are going public in the United States, but public companies are still the focus of securities law and enforcement. A major exception is that anti-fraud provisions apply to all companies, public or private. Theranos is a prominent example. The Securities and Exchange Commission (SEC) sued this private company for securities fraud. This article examines one societal cost of the decline of public companies: the loss of information needed to detect and punish fraud. It analyzes the SEC’s securities fraud enforcements against private companies and assesses the information costs of moving to an anti-fraud-only regime. It concludes by identifying ways to incentivize information disclosure in the newly private universe of corporations, including a proposal to expand whistleblower protection for employees of private companies.

Keywords: startups, securities regulation, fraud, white collar crime, securities enforcement, SEC, Theranos, whistleblowers, securities and exchange commission, unicorns, private companies

JEL Classification: K1, K22, K2

Suggested Citation

Winship, Verity, Private Company Fraud (February 14, 2020). UC Davis Law Review, 2020, University of Illinois College of Law Legal Studies Research Paper No. 20-13, Available at SSRN: or

Verity Winship (Contact Author)

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
217-244-8161 (Phone)


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