It is unfortunate, but words often associated with money and fortune are "cheat," "steal" and "lie. Chances are you were never called on it, because your friends trusted you. Just as we trust our friends, we put faith in the investing world.

Investing in a stock takes a lot of research, but it also requires us to make a lot of assumptions. For example, we assume reported earnings and revenue figures are correct, and that management is competent and honest, but these assumptions can be disastrous. Understanding how disasters happened in the past, can help investors avoid them in the future.

With that in mind, we'll look at some of the all-time greatest cases of companies betraying their investors. Some of these cases are truly amazing; try to look at them from a shareholder 's standpoint. Unfortunately, these shareholders had no way of knowing what was really happening, as they were being tricked into investing.

He created more than 10, phony documents and sales receipts, without anybody suspecting anything. Amazingly, Barry Minkow was only a teenager at the time! He was sentenced to 25 years in prison. However, the company was really shipping fruit baskets to customers.

The employees then created fake documents to appear as though they were recording sales. Over 20, investors lost almost all of their investment in a company that was once considered a Wall Street darling.

Biggest Stock Market Scams in History | Zero Hedge

Bre-X Minerals, This Canadian company was involved in one of the largest stock swindles in history. Its Indonesian gold property, which was reported to contain more than million ounces, was said to be the richest gold mine, ever. The party ended on March 19,when the gold mine proved to be fraudulent and the stock tumbled to pennies, shortly after.

Enron, Prior to this debacle, Enrona Houston-based energy trading company was, based on revenue, the seventh largest company in the U. Through some fairly complicated accounting practices that involved the use of shell companiesEnron was able to keep hundreds of millions worth of debt off its books.

Doing so fooled investors and analysts into thinking this company was more fundamentally stable, than it actually was. Additionally, the shell companies, run by Enron executives, recorded fictitious revenues, essentially recording one dollar of revenue, multiple times, thus creating the appearance of incredible earnings figures. As Enron fell, it took down with it Arthur Andersen, the fifth leading accounting firm in the world at the time. Andersen, Enron's auditorbasically imploded after David Duncan, Enron's chief auditor, ordered the shredding of thousands of documents.

The fiasco at Enron made the phrase " cook the books " a household term, once again.

WorldCom, Not long after the collapse of Enron, the equities market was rocked by another billion-dollar accounting scandal. Telecommunications giant WorldCom came under intense scrutiny after yet another instance of some serious "book cooking.

Apparently, the company felt that office pens, pencils and paper were an investment in the future of the company and, therefore, expensed or capitalized the cost of these items over a number of years. In fact, stock house stradella business was becoming increasingly unprofitable.

Who suffered the most in this 1 minute binary options trading itm reviews system The employees; tens of thousands of them lost their jobs. TYCWith WorldCom having already shaken investor confidence, the executives at Tyco ensured that would be an unforgettable year for stocks.

Before current stock market scandals in india scandal, Tyco was considered a safe blue chip investment, manufacturing electronic components, health care and safety equipment. During his reign as CEO, Dennis Kozlowski, who was reported as one of the top 25 corporate managers by BusinessWeeksiphoned hordes of money from Tyco, in the form of unapproved loans and fraudulent stock sales.

Kozlowski and Belnick arranged to sell 7. These funds were smuggled out of the company, usually disguised as executive bonuses or benefits. The executives escaped their first hearing due to a mistrial, but were eventually convicted and sentenced to 25 years in jail. HLSAccounting for large corporations can be a difficult task, especially when your boss instructs you to falsify earnings reports.

In the late s, CEO and founder Richard Scrushy began instructing employees to inflate revenues and overstate HealthSouth's net income. At the time, the company was one of America's largest health care service providers, experiencing rapid growth and acquiring a number of other healthcare-related firms. An independent law firm concluded the sale was not directly related to the loss, but investors should have taken the warning.

Harshad Mehta - Wikipedia

The information came to light when CFO William Owens, working with the FBI, taped Scrushy talking about the fraud. Amazingly, the CEO was acquitted of current stock market scandals in india counts of fraud, but was later convicted on charges of bribery.

Bernard Madoff, Making for what could be an awkward Christmas, Bernard Madoffthe former chairman of the Nasdaq and founder of the market-making firm Bernard L.

Madoff Investment Securities, was turned in by his two sons and arrested on Dec. The year-old kept his hedge fund losses hidden, by paying early investors with money raised from others.

The fund's supposed strategy, which was provided as the reason for these consistent returns, was to use proprietary option collars that are meant to minimize volatility. The Bottom Line The worst thing about these scams, is that you never know until it's too late. These scammers can pick a lifetime's worth of garbage and not even come close to repaying those who lost their fortunes. The SEC works to prevent such scams from happening, but with thousands of public companies in North America, it is nearly impossible to ensure that disaster never strikes again.

8 scams that rattled the Indian stock markets - obupexeh.web.fc2.com Business

Is there a moral to this story? Always invest with care and diversifydiversify, diversify. Maintaining a well-diversified portfolio will ensure that occurrences like these don't run you off the road, but instead remain mere speed bumps on your path to financial independence. For further reading, see Playing The Sleuth In A Scandal Stock. Dictionary Correlation forex pdf Of The Day.

A measure of what it costs an investment company to operate a mutual fund.

Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education.

The Biggest Stock Scams Of All Time By Investopedia Staff Share. Online Investment Scams Understanding how disasters happened in the past, can help investors avoid them in the future. Learn about some of the creepiest cases of fraud and the characters behind them.

Learn about the crimes and punishments of some of the most infamous convicted white-collar crooks. Today is the 15th anniversary of the former oil giant's bankruptcy filing. These companies have a negative aura around their names that may be detrimental to your application.

High-profile downfalls of corporate CEOs are not a new phenomenon. Here are five of the most public and egregious CEO ethics failures. Find out how to tell if a company is manipulating its financial data, so you don't invest in the next Enron. Madoff received the maximum allowable time for his sentence - much more than any white-collar criminal before him.

At one time the second largest long distance phone company in the U. We can learn of investing strategies by studying previous financial disasters. This information is accurate as of September Hot on the heels of the Enron bankruptcy, ominous rumblings Learn about corporate social responsibility.

Explore how Enron's lack of corporate responsibility ultimately destroyed the Learn about the primary financial crimes involved in the ZZZZ Best case, one of the most notorious episodes of accounting At 18, Barry Minkow was the youngest CEO to ever take a company public.

At 20, he was the youngest CEO to be indicted for Learn about the perils of a lack of corporate social responsibility. Examine the WorldCom fraud, which led to its bankruptcy Learn more about the agency problem and find a few famous examples. Find out what contributes to these problems and how investors An expense ratio is determined through an annual A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.

A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all A legal agreement created by the courts between two parties who did not have a previous obligation to each other. A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation.

A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over No thanks, I prefer not making money. Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Quizzer Net Worth Calculator. Work With Investopedia About Us Advertise With Us Write For Us Contact Us Careers.

Get Free Newsletters Newsletters. All Rights Reserved Terms Of Use Privacy Policy.