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Top 5 Stock Market Scams Of All Time

The stock market is a haven of all kind of people as well as companies. While most people are usually there to make money, how some make their fair share underscore the need to be extremely careful. Just like any other marketplace, the stock market has experienced its fair share of scams.

Over the years, there have been a number of scams that have left many investors with significant financial losses. Below are some of the biggest stock market scams that have sent shockwaves.

Bernard Madoff: $65 Billion Scam

Bernard Madoff masterminded one of the biggest stock market scams of which when the dust settled, thousands of investors had lost close to $65 billion. The founder of Bernard L Madoff Investment Securities operated what turned out to be a Ponzi Scheme that offered low-risk high return investments.

Madoff was able to pay early investors consistent high returns by using the money of new investors. However, most of the hidden losses finally caught up with him, and he was later arrested in 2008. He was sentenced to 150 years on 11 counts of stock market fraud.

Bernard Ebbers: $100 Billion Stock Loss

Operating as the Chief Executive Officer of WorldCom, Bernard Ebbers grew the company to become the 2nd largest telecommunications company in dubious ways. The executive exaggerated the company’s assets by $11 billion.

When the scheme was uncovered, WorldCom share price plunged from $64 to $1, resulting in losses of close to $100 billion for investors. Ebbers was hit with a 25 years prison term.

Enron: $74 Billion Stock Scam

Enron was at one time dubbed as the seventh-largest company in the U.S on relying on complicated accounting practices that kept hundreds of millions of debt out of books of accounts. The move fooled investors allowing the company to enjoy hefty valuation.

Once the scheme was uncovered in 2001 the company’s stock price plummeted from $90 to less than 70 cents resulting in losses of close to $74 billion. The company later on filed for bankruptcy

Qwest Communications International: $3 Billion Stock Scam

Joseph Nacchio is believed to have propagated $3 billion in financial fraud. As part of the scheme, Nacchio benefited from inflated stock prices as well as insider stock trading. At the peak of the scheme, he earned close to $52 million selling stocks, which he had insider information indicating they were going to plummet. He was arrested charged with 19 counts of insider trade leading to a sentence of 6 years.

Michael De Guzman Bre-X Minerals: $3 Billion Stock Scam

Michael de Guzman masterminded a scheme in which he claimed to have discovered rich gold property in Indonesia containing more than 200 million ounces. Bre-X Minerals stock price consequently skyrocketed to $280, giving the company a market cap of $4.4 billion.

Once it was discovered that the said mine did not have any gold, Bre-x Minerals stock plummeted to zero resulting in close to $3 billion in losses.

Ruchi Gupta

Ruchi Gupta covers various beats from finance to technology and from lifestyle to hobbies. She has an MBA in Finance. Ruchi enjoys writing on celebrities and political news. She likes traveling and exploring places.

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