You are wrong on that Insurance company do cover fraud. That is the reason why public companies have to have insurance to trade publicly in the first place. And
Second you are correct that the corporate veil will be pierced if there is fraud that is why shareholders can sue the insurance company the People that committed fraud the auditors and any one else that you can sue.
Third SEC don't prosecute the FBI does. SEC is not part of Department of Justice they report directly to Congress
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