Three Famous Securities Fraud Cases


Bankruptcy issues

The ability of the dishonest to negatively impact others through securities fraud, which the FBI defines as crimes that either deceive investors or manipulate the financial markets, seems to grow with each generation. It is counted among the white collar offenses, but it still devastates the lives of victims. This crime often is well hidden due to the business savvy and intellect of perpetrators, but that does not mean that karma, and the FBI, never catches up to the perpetrators. Here are three of the more highly publicized incidents of securities fraud that have been brought to the criminal justice system.

  1. Enron: Kenneth Lay and Jeffrey Skilling are responsible for the loss of $74 billion dollars of investors money. Their scheme was falsifying the financial results of the company Enron, leading investors to believe the company was fairing far better than it was. Enron went from the seventh largest American company to bankruptcy, while Lay and Skilling were both indicted on numerous charges. Lay died before he could be sentenced, but Skilling received 24 years in prison and a fine of $45 million dollars.
  2. Bernard Madoff: No list about securities fraud would be complete without Bernie Madoff. This morally deficient swindler abandoned his fiduciary responsibility and stole approximately $65 million from individuals in an elaborate pyramid scheme. He made sure investors received falsified bank statements showing profitable investments, but the economic downturn and the markets crashing drove people to withdraw their funds…or at least, that’s what they tried to do. When Madoff could not deliver the vast sums people were owed, the entire scheme came to light, leading to more than one bankruptcy case. Madoff received 150 years in prison and $170 million dollars in restitution.
  3. Qwest: Joseph Nacchio used insider trading and inflated stock prices to profit while knowing that Qwest’s stocks were about to dive. He personally earned $52 million off the scheme and cost investors approximately $3 billion total. He was convicted of 19 counts of insider trading, had to return the $52 million and pay $19 million in fines and was given 6 years in prison.
  • Martin Shkreli: It would be wrong to place Shkreli in the formal list because his criminal proceedings have not concluded. As a result, he becomes bonus material. Many readers are likely to remember this man, even if they do not know of his trial, due to the morally reprehensible stunt he pulled last year in which he bought a pharmaceutical company in order to raise the price of a life-saving medicine from $13.50 a pill to $750 a pill. He probably regrets drawing so much attention to himself now that he has been charged with securities fraud and conspiracy.

Leave a Comment