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Not only do investors lose but so can creditors, taxing authorities, and employees.
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, Enron , a 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 companies , Enron 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 auditor , basically 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, its business was becoming increasingly unprofitable. Who suffered the most in this deal?
The employees; tens of thousands of them lost their jobs. TYC , With WorldCom having already shaken investor confidence, the executives at Tyco ensured that would be an unforgettable year for stocks. Before the 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 BusinessWeek, siphoned 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.
HLS , Accounting 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. Amazingly, the CEO was acquitted of 36 counts of fraud, but was later convicted on charges of bribery.
Bernard Madoff, Making for what could be an awkward Christmas, Bernard Madoff , the 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. You need to really know what you are doing, in order to actually make money. All of those fake investment software, leads you to an unlicensed offshore fake Forex broker. Once you signup with these scam artists, it is a long battle to try and recover your money, read more.
One being a Forex broker whose trading platform is rigged, to make all traders lose money. This is done with bad quotes, and other algorithm modifications. That kind of scam is not very prevalent due to the nature of the financial markets.
The Forex Broker Scam is usually centered around managed accounts. Unregulated Forex brokers will pitch investors to join a managed account handled by one of their senior analysts, and promise high monthly returns. Fact is; there are no licensed or legitimate brokers that will manage your account, or promise fixed returns.
There a few reasons why a broker can hold up an investors cash, with the main reason coming from the trader having accepted bonus money, or not reading the terms and conditions.
You can read more about this on the complaints page. The Binary Options Scam that is more prevalent among rogue brokers is unauthorized credit card charges.
A scam broker will charge a traders credit card, to add more money to their trading account, because the scam binary option broker gets paid based on new deposits. The best precaution a trader can take is to use a credit card, not a debit card, that has the ability to dispute charges in the event of fraud.
Traders who authorize direct debit withdrawals from their bank account are playing a very risky game.
Stock Broker Fraud Summary. All forms of stock broker fraud violate the fiduciary responsibility of the broker to the investor. The key principle is the broker placing his interests in front of the investor’s best interests.
Choose your Stock trading broker wisely! Today there are over online brokers that you can open an account with. However there are some dishonest brokers, who may manipulate prices or won’t let you withdraw your investment. Tutorial: Online Investment Scams 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.
We are skilled investment fraud lawyers, based in Houston, TX, who represent investors nationwide who have lost savings and retirement due to mishandling of brokerage accounts. Contact a securities fraud attorney with SSEK for the help you need. Securities fraud can also include outright theft from investors (embezzlement by stockbrokers), stock manipulation, misstatements on a public company's financial reports, and lying to corporate auditors.
Scam Broker Investigator is one of the largest and most trusted broker review websites, since it was established in On our website you will find honest reviews of Forex, Crypto and CFD brokers, so that you will know if they are licensed and regulated by a governments financial regulator. View the performance of your stock and option holdings. Academy. Is your forex broker a scam? Share. If you do an internet search on forex broker scams, the number of results is staggering.