Background of Fraud Auditing and Forensic A
The company drove the price of the stock up through artificial means; combined with the circulation of largely taking form of new impression that the stock stories designed to give the many Dutch could only go higher. Not only did capital stay in England, but pressure.6 investors bought South Sea stock, thus increasing the inflationary other joint-stock companies then joined the market, usually making and were nicknamed "bubbles." fraudulent claims about which required all joint-stock June 1720, the Bubble Act was passed. companies to have a royal charter. Partly because it had a royal charter the South Sea Company shares rocketed to f890 in early June 1720. The price finally reached f1,000 in early August, and a sell-off that began in June began to accelerate. The sell-off was begun largely by directors them- selves cashing in on huge stock profits. As the stock price began to decline, the company directors attempted to talk up and prop up the stock (e.g., having agents buy stock) but to no avail-the stockholders had lost confi- dence and a run started in September. By the end of the month, the stock price dropped to a low of f 150.