Greed is Good: Top 4 Wall Street Scams

Greed is Good said Gordon Gekko in the movie Wall Street released in 1987; greed seems to be a very common theme on Wall Street. Over the last few decades we have seen a series of scandals on Wall Street, ranging from cooperate false earnings reports to ponzi schemes by money managers. Over the years we have seen numerous high profile fraud cases, most recently charges were brought up against investment banking giant Goldman Sachs. The public has lost all trust and faith in Wall Street and its overcompensated executives. Let’s review some of the biggest Wall Street greedy scumbags, in no particular order.

WorldCom

WorldCom probably pulled of one of the largest accounting frauds in history. Between January 2001 and March 2002 they admitted to have inflated profits by no less then $3.8BN, by the end of 2003 it was estimated that WorldCom’s assets had been inflated by about $11BN.

Enron

One of the most publicized and well-known scandals is that of Enron. Enron’s third quarter earnings report in October 2001 sent off red flags, which eventually led to its bankruptcy in November 2001. Its stock price between Aug 2000 and Nov 2001 fell from $90 to less then $1. Shareholders lost $74BN leading up to Enron’s bankruptcy; employees lost billions in pension funds. Although in later lawsuits shareholders and employees were awarded some funds, these were nowhere near what they lost.

“Bernie” Madoff

Once one of the most respected investors and money managers, Bernard Madoff (Bernie Madoff) is nothing more then a lying, stealing, greedy thief. Madoff ran one of the longest ponzie schemes of our time; I still do not understand how it was not uncovered for such long time. If it were not for the financial crisis this ponzie scheme would have continued. According to the criminal complaint Madoff defrauded clients of almost $65 billion, making it the largest ponzie scheme in history. Although the actual number may never be known according to some estimates Bernie Madoff’s net fraud could be up to $20 billion.

Arthur Andersen

Arthur Andersen was once one of the “Big five” accounting firms providing auditing services. Previous to the Enron scandal Andersen was fined by the SEC for auditing work for Waste Management in the mid 90’s, however the Enron scandal took Andersen down. Arthur Andersen was the auditor for Enron and was found guilty for obstruction of justice when they destroyed important documents linking them to Enron. Eventually the verdict was overturned but Arthur Andersen never made it back to the accounting world.

I have just highlighted out the biggest cases, there are hundreds of smaller counts of fraud and greed on Wall Street. Every time it seems that the government and regulators are behind in setting appropriate measures and protecting the public. Will we ever trust Wall Street again? Is Greed Good?