Be Aware of These Wall Street Scams
During the history of Wall Street, there have been crooks and con artists who have broken the rules to make money. These people have left regulators scrambling to try to close any loopholes and correct grey areas in all the regulations to prevent copycats in the future. There are a few things in life that you can count on which are taxes, death, and scammers. Here are just some of the biggest scams that Wall Street history holds.
WorldCom- Bernard Ebbers
Total Amount: $100 Billion Dollars
Bernard Ebbers was WorldCom’s CEO, which was the 2nd largest telecommunications business in the US because it acquired many smaller companies. The acquisitions happened rapidly, and WorldCom ended up in debt. However, Ebbers was exaggerating the company’s asset value by over $11 billion dollars.
The investors were hit hard when the WorldCom stock dropped from $64 to a $1 per share. At the time, almost a million people owned bonds and stock in WorldCom and lost about $100 billion dollars during the collapse.
WorldCom was largest the accounting scam in the United States history, until Madoff. Ebbers ended up being convicted of conspiracy and fraud and are now serving a prison sentence of 25 years.
Bernard L. Madoff Investment Securities LLC – Bernard Madoff
Total Amount: $18 Billion Dollars
Even though $18 billion dollars is not a huge amount compared to other Wall Street scams, it’s the way that the scam worked that makes this the largest investment scam in both the United States and the world. The scam was also very simple, Madoff would take money from people and organizations claiming that he would invest the money for them and would never invest it. Madoff took money from the new clients and paid it to the clients who were demanding their money. This tricked them into thinking that he was creating huge returns for them. The total amount of the scam was $36 billion, but $18 billion is still missing today. Madoff is serving a 150-year prison sentence.
Enron – Jeffery Skilling and Kenneth Lay
Total Amount: $74 Billion Dollars
At one point, Enron was the seventh biggest company in the United States and was worth around $68 billion dollars. In 2001, Enron started to come to an end as they filed bankruptcy. Jeffery Skilling and Kenneth Lay were running Enron at the time.
Kenneth had duped investors for over $74 billion dollars because he exaggerated the health of the company. The investors had to deal with the bankruptcy, which caused the stock to drop from $90 for a share to under a dollar a year. Kenneth was indicted on 10 counts of fraud and other charges in 2006. Kenneth died before his sentencing. Skilling is now serving a 24-year sentence and was fined $45 million dollars.
Scams Will Always Happen on Wall Street and in Your Home Town
Even with all the scams that have happened in the history of Wall Street, there will still be scams in the future. So, the regulators try to find the loopholes and correct them before someone can abuse them. So be aware of where you are palcing your money, and whom you trust.