Financial disasters roll of honour
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We all know those who do not remember history are condemned to repeat it. But what of those who do remember history? Well, they are apparently condemned to repeat it, too.
See also
| Scandal | Date | Where | Loss | Reason | Firings | Jail-Time? |
|---|---|---|---|---|---|---|
| Post Office Horizon IT scandal | UK | Unjustified prosecution and conviction of hundreds of subpostmasters across the UK | Unaccountability, groupthink, astonishing collective amnesia, widespread incompetence, stupidity. | Conviction, imprisonment, suicide and bankruptcy of hundreds of perfectly innocent and quite nice people. | Loss of public honours (CBE). No firings yet: many candidates for defenestration jumped before they could be fired. | Excoriating public humiliation in front of public enquiry. Increasingly likely some criminal prosecutions may follow. |
| Credit Suisse | Switzerland | Gradual decline into entropy with a 92% decline in share price since 2015. | Hubris, widespread incompetence, stupidity, spying, uselessness. | Billions and billions over a series of avoidable cockups. | Like the old man in Monty Python and the Holy Grail, “I’m not dead. I think I’m going for a walk. I feel happy.” Market (to SNB): “Isn’t there anything you can do?” | It is not, yet, a crime to make a series of howling cockups[1] over a credulity-defying period any more than it is a crime to not read an AT1 prospectus. Reputations damaged for ever, but alas no porridge, however richly deserved it may seem. |
| Silicon Valley Bank memeplex | 2023 | US | $80bn or more | Dopey bank management, regulator asleep at switch, Peter Thiel panicking | Bank insolvent. Bondholders and shareholders wiped out. Other banks levied. Triggered other moral panics such as First National, Signature bank and others (poor old lucky Credit Suisse) | None yet. Lots of arguments about the presence or absence of moral hazard. Moral panic more like. |
| Frank | 2023 | US | $175m | Fraud, unfeasible gullibility | Javice got fired. Surely more to come | Not yet clear |
| FTX/Sam Bankman-Fried | 2022 | US, Bahamas | $32bn (so far) so some claims that everything has now been recovered and returned to its rightful owner | Hubris, stupidity, fraud | Fired: Gary Wang, Caroline Ellison, SBF. Bankruptcies: Alameda, Genesis, Blockfi. Suspensions of trading: Gemini Reported Losses: Crypto.com, Tiger Global Management, the Ontario Teachers' Pension Plan, SoftBank Group, BlackRock, Lightspeed Venture Partners, Temasek, and Sequoia Capital reported losses of $1bn |
Charged with wire fraud, conspiracy to commit securities fraud, money laundering, conspiracy to defraud the U.S., violation of campaign finance laws. |
| Barclays MTN Programme Limit | 2022 | US | £1.3bn | Internal Operations | None reported but you have to fear for those poor folk in ops. I beg your pardon? What poor folk in ops? Oh, Right. | No-one goes to jail for forgetting to monitor a programme limit. |
| LME Nickel short squeeze | 2022 | London | “Billions” | LME | None reported ... yet | No |
| Evergrande | 2021 | China | $300bn | Who knows? | No | |
| Archegos | 2021 | US | $10bn+ | UMR Internal operations |
100+ across brokers plus several senior executives and one CEO | Eyes peeled, Mr Huang |
| Greensill | 2021 | UK | $4.6bn | |||
| Melvin Capital Management LP | 2021 | US | $7bn | Hubris detector failed | Everyone! The fund shut down shortlay after | Talk of regulators, outrageously, going after the outsider traders, but nothing as yet. |
| Citigroup v Brigade | 2021 | US | $500m | Outsourcing, Operations, IT | Not reported but wouldn’t fancy being head of the team in Bangalore | No |
| Nikola | 2020 | US | About 80% share drop | CEO misrep | Must have been plenty | CEO indicted on charges of securities fraud |
| Wirecard | 2020 | Germany | $4bn | CEO misrep | All of them | Three charged with fraud including CEO |
| WeWork | 2019 | US | $11bn over three years | CEO yogababble | Nothing to see here folks! Got a new venture to start up | Jail? Dude hasn’t even been kicked off Marc Andreesen’s Xmas Card list. |
| Carillion | 2018 | UK | £7bn | Auditors | 3,000 jobs | No but litigation a-plenty |
| Patisserie Valerie | 2018 | UK | £94m | Auditors | 900 jobs | No but PWC fined 2.3m |
| Abraaj | 2017 | Saudi | $1bn | Fraud, Virtue signalling | Some, not clear how many. | Naqvi extradited and charged in US, many many gatekeepers fined |
| Fyre festival | 2017 | US | ||||
| Mozambique tuna bonds | 2012-2016 | Mozambique, Russia and Switzerland | £1.5-2bn Credit Suisse fined £350m and required to forgive its loans ouch | Fraud, corruption, money laundering | Plenty, including three Credit Suisse bankers and the minister in Mozambique | Three Credit Suisse bankers done on money laundering charges |
| 1MDB | 2016 | Malaysia, but tentacles stretching all over the world: USA, Saudi Arabia, Singapore, Switzerland, China | Somewhere between $4.5bn and $8bn | Colossal fraud, corruption, money laundering and hip-hop | Hell yeah. Prime Ministers, Goldman Sachs Partners, and one dude — Jho Low — on the lam in rural china | You betcha: Australia, Hong Kong, Indonesia, Luxembourg, Seychelles, Singapore, Switzerland, UAE, UK and US are all actively pursuing action. The two Goldman partners pled or were found guilty; one sentenced to 10 years, one awaiting sentencing. Malaysian PM and wife convicted and sentenced to 10+ years with money laundering. If anyone catches Jho Low he’s for the high jump too. |
| Mossack Fonseca | 2016 | Panama | ||||
| Theranos | 2016 | US | peak valuation 10bn | Fraud, delusion | everyone at the firm | Founders in jail for hundreds of years. |
| Wells Fargo accounts fraud | 2016 | US | $2.7bn in fines and civil suits | fraud, out-of-control rampant bad appledom | Plenty | SEC civil suits vs two senior executives |
| Volkswagen emissions | 2015 | Germany and US | ||||
| AIG | 2008 | US | US$61bn | Misunderstanding mortgages | Not reported | Some irritation that bonuses were still paid |
| Olympus | 2012 | Asia | US$4.9 | Accounting shenanigans, fraud | 2700 jobs | Kikugawa and Mori sentenced to 3 years in prison, 5 years suspended. Auditor sentenced to 2.5 years in prison, 4 years suspended. Olympus was fined 700 million yen ($7 million USD). In April 2014, six banks filed a civil suit against Olympus over the fraud, seeking an additional 28 billion yen in damages. |
| LIBOR rigging | 2009 | Worldwide | “If your mortgage or car-loan was pinned to Libor then perhaps you were disadvantaged by the manipulation of the rate. But it is also possible that you benefited from it.” To date, no one has been able to prove any loss. | Bad apples | Lots of firings of mid-level traders and rate submitters. Strange absence of exits from the Executive Suite, though you could say it contributed to Bob Diamond’s defenestration | Tom Hayes and Carlo Palombo were among 37 City traders prosecuted for manipulating benchmarks Libor and Euribor. Both men spent time in prison before being released in 2021. Matt Connolly and Gavin Black were convicted in the US then their convictions were overturned in 2023. |
| London Whale | 2012 | UK | £6.2b | Rogue trader | Bruno Iskill was fired; an external lawfirm did a deep dive but unclear anyone else was directly whacked | No |
| Kweku Abodoli | 2011 | UK | $4.5bn | Rogue trader | Abodoli and his line management | Abodoli |
| Jérôme Kerviel | 2008 | UK | $6.7bn | Rogue trader | Kerviel and his line management | Kerviel |
| Bernie Madoff | 2008 | US | US$65bn | Fraud/Ponzi | Whole firm, many subsidiaries and feeders | Madoff imprisoned. Several implicated enablers topped themselves. |
| Amaranth | 2007 | US | US$9.2 | Hubris, Markets misbehaving | Whole firm | Charges settled on payment of 750,000 fine. |
| Tyco | 2002 | US | US$3bn | Accounting shenanigans | Unclear | Kozlowski did a stretch. |
| Parmalat | 2003 | Italy | EUR14bn | Accounting shenanigans | Lots of settlements, fines and red faces | |
| Freddie Mac and Fannie Mae | 2008 | US | US$14.9bn | Failure to understand the concentrated risk of subprime home loans | No it was everyone else’s fault | No it was everyone else’s fault |
| Global Crossing | 2002 | US | US$47bn if you believed the company0146s valuations | accounting shenanigans | Whole firm | Gary Winnick and other ex-executives settled lawsuits filed by investors and former employees accusing the executives of committing securities fraud by using improper accounting to inflate the company's revenue |
| WorldCom | 2002 | US | US$11bn | Accounting shenanigans | Whole firm | Ebbers convicted of fraud, conspiracy, and filing false documents with regulators and sentenced to 25 years. |
| Enron | 2001 | US | US$63.4bn | Accounting shenanigans, hubris, mismanagement | Whole firm, plus Arthur Anderson collapsed, which was nice, oh and the Sarbanes Oxley Act | Skilling, Lay and Fastow jailed, for fraud, money laundering, insider trading, and conspiracy among other things. |
| LTCM | 1998 | US | $3.6 bn bailout orchestrated by the Fed | Black-Scholes option pricing model attacked them from nowhere | Everyone out of a job, Master of the Universe-sized reputations (John Meriwether, Myron Scholes, Robert C. Merton) cut to ribbons | No, though fourteen bank CEOs were locked in a room by the Federal Reserve for a weekend so that is something. |
| Yasuo Hamanaka | 1996 | Asia | US$1.8bn | Rogue Trader | Fired | Hamanaka convicted on four counts of forgery and fraud and sentenced to eight years in jail. Sumitomo paid fines of US$150 million to CFTC and US$8 million to the SIB to settle charges of copper price manipulations. |
| Nick Leeson | 1992 | UK Singapore | US$1.4 | Rogue trader | Whole firm | Leeson jailed. |
| Lehman | 2008 | Worldwide | US$613bn | Bankruptcy | Hundreds of thousands | Noone. |
- ↑ except where the individual cockups were themselves criminal of course