The stock market attracts all kinds of companies and entrepreneurs. Whereas some companies unfortunately fail, a few scams have found their way onto the stock market as well. In fact, there have been quite a few stock market scams over the past few decades, all of which caused significant financial losses for investors all over the world.
5. Bre-X Minerals
In the year 1997, the stock market was mesmerized by Canada’s Bre-X Minerals. At the time, the company’s Indonesian gold property was labeled as “the world’s richest gold mine”. This caused company stock to skyrocket in value, turning everyday investors into millionaires. However, the gold money turned out to be virtually barren and stock prices came down crashing hard in the process. The allure of being part of the next gold rush made people greedy, for which they paid the ultimate financial price.
4. Tang Wanxin
It has to be said, the Tang Wanxin scam should have never run its course without government intervention. This particular Chinese investor raised 45 billion yuan over the course of four years without having received regulatory approval. He also rigged prices of multiple listed companies owned by himself, allowing him to inflate share prices. These share prices were then used for loans and inflating his other companies even further. Defrauding the Chinese republic is frowned upon, eventually resulting in Tang Wanxin facing legal charges. In May of 2006, the tycoon was convicted to eight years behind bars and a US$50,000 fine.
3. The Junk Bond King
Michael Milken, better known as the Junk Bond King, is quite a notorious figure in the world of finance. During his career at Drexel Burnham Lambert, Milken brought in huge sums of money. To achieve this goal, he used inside knowledge of takeovers to make millions of dollars. It is not surprising the Junk Bond King was eventually accused of insider trading, stock parking, and even tax evasion. He faced 98 counts of racketeering and fraud, resulting in a ten-year prison sentence and a US$600m fine.
2. Anthony Elgindy / Jeffrey Royer
This is perhaps one of the more intriguing stock market scams, as it involves a corrupt FBI agent. Elgindy made tons of profit by exposing overvalued stocks and short-selling them. He was assisted by Royer – the corrupt FBI agent – who backed him up by logging into government databases to dig up confidential information which he then used to manipulate the stock market. Corrupt law enforcement agents are always attracted to the big money, as we have also seen in the Silk Road investigation.
1. The Waterloo Stock Market Scam
The Battle of Waterloo is a pivotal moment in our society’s history. While many lives were lost in 1814, Nathan Rothschild – a member of The Rothschild family – successfully manipulated the stock markets. He successfully used the latest news regarding this battle to his advantage and painted a very gloomy picture regarding the fight, even though it was rather evident Napoleon would lose sooner or later. Due to his tale, the stock market panicked and a lot of stocks started plummeting in value.
Nathan Rothschild bought all of these stocks through various brokers in an effect to make a quick profit. This brilliant move turned into a 6 million GBP profit once the news of England’s victory in the Battle of Waterloo became public knowledge. Virtually every security and stock went up in price exponentially. A dirty scam tactic to manipulate the stock market, but it proved to be quite an effective one, to say the least.
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