Top 5 biggest financial frauds in the world

Discussion in 'Trading' started by Biabfieli, Mar 19, 2008.

  1. Biabfieli


    Top 5 biggest financial frauds in the world

    March 17, 2008 - 6:17pm | author: sergiu23 | Articles | Fraud

    We all heard about thefts everyday. No one likes them. But these are big ones, that managed to steal incredible sums and gained a hero status among the common , poor people.

    Big frauds history

    The first big fraud was made in India, in 1992, by a great success broker with over 10 years of experience. Having a broker company at the beginning of the '90's , Harshad Mehta obtained funds from the bank market, which he operated at Bombay Stock Exchange. In 1992 the Indian stock exchange collapsed, the total lost being around 1.3 billion dollars, all being made by Mehta. "The Big Bull", as he was called ended in jail , where he died 10 years later.

    Beside the 72 penal accusations, there were another 600 civil processes opened against him, many of them not being solved until his dead.

    The manipulation of prices with the role of dominating a market was signaled in Japan in 1996. In this case, Yasuo Hamanaka, chief of copper trading department on Japan market, made in 10 years operations that lead to lost of 2.6 billion dollars. He was sentenced to 8 years in prison.

    But there are frauds which cause major loses, but no profit for the one that makes it. One trader from Allied Irish Bank, the biggest Irish bank, managed to lose about 750 million dollars with foreign exchange market. Beside the damage he made to the corporate in USA where he was employed, trader John Rusnak made 850,000 dollars from salary bonuses between 1997 and 2001. Rusnak covered his loses with fake reports to the bank, for which he was sentenced to 8 years in prison.

    Another famous case for the big sum involved, but which doesn't implicate fraud is the one of the american John Meriwether, financial director of investment bank Salomon Brothers. Long Term Capital Management, created by him, raised in 2 years to 1.3 billion dollars, but failed because the financial crises in Russia , in 1998. But he went further and now he is ruling his own investment fund, JWM Partners, created in 1999 with 250 million dollars, sum that raised until now to 2.6 billion dollars.

    Top 5 biggest frauds

    1. Jerome Kerviel - Parisian trader of Societe Generale created damages of 7.1 billion dollars with term operations on european stock indicators.
    2. Brian Hunter - Lost of 6.4 billion dollars from operations with derived instruments with natural gases lead to the extinction of Amaranth Advisory investment fund.
    3. Giancarlo Paretti - The italian business man buyed using credits from banks Hollywood studios, merging into fraudulent operations that caused 5 billion dollars lost.
    4. John Meriwether - Derived placements with active supports made by the financial director of Salomon Brothers caused lost of 4.6 billion dollars.
    5. Yashuo Hamanaka - Copper trader of Sumitomo Corporation caused 2.6 billion lost with wrong term transactions placement.