From Bernie Madoff in US to Harshad Mehta scam in India: Six biggest stock market scams of all time



The world of stock markets, with its promise of wealth and prosperity, has unfortunately been marred by several notorious scams throughout history. These fraudulent activities have shaken investor confidence, caused financial turmoil, and resulted in substantial losses. Here are six biggest stock market scams that shook the financial system.

Harshad Mehta Scam (1992)

The Harshad Mehta scam, an infamous securities scam in India, involved stockbroker Harshad Mehta manipulating the stock market through “circular trading.” He exploited loopholes in the banking system to manipulate stock prices. However, the scam was eventually exposed, leading to a market crash and significant losses for investors.

Ponzi Scheme by Charles Ponzi (1920)

Charles Ponzi promised investors high returns through arbitrage in international reply coupons. However, he used funds from new investors to pay off existing ones, leading to a collapse and financial ruin for many.

Enron Scandal (2001)

The Enron scandal was a notorious corporate fraud case that unfolded in 2001. Enron, an energy company, engaged in accounting manipulations and off-balance-sheet transactions to inflate profits and hide debt. When the fraud was exposed, Enron filed for bankruptcy, causing significant financial losses for shareholders and employees. The scandal led to the dissolution of Arthur Andersen, one of the world’s largest accounting firms, and prompted regulatory reforms to strengthen corporate governance and financial reporting standards.

WorldCom Accounting Fraud (2002)

The WorldCom accounting fraud was a major scandal that rocked the corporate world in 2002. WorldCom, a telecommunications company, engaged in fraudulent accounting practices, inflating profits and concealing expenses. The scheme involved improper capitalization of costs, fictitious accounting entries, and improper revenue recognition. When the fraud was uncovered, WorldCom filed for bankruptcy, resulting in significant financial losses for investors and employees. The scandal exposed flaws in corporate governance and led to increased scrutiny and regulatory reforms. The scam led to the company’s bankruptcy and significant losses for investors.

Tyco International Scandal (2002)

Tyco International faced a scandal involving CEO Dennis Kozlowski and CFO Mark Swartz, who were found guilty of looting the company through unauthorized compensation and fraudulent practices.

Bernie Madoff Ponzi Scheme (2008)

The Bernie Madoff scheme was one of the largest investment frauds in history. Madoff promised high returns through a fake investment strategy, but instead operated a Ponzi scheme, using new investors’ money to pay off earlier ones. The scheme unraveled during the 2008 financial crisis, resulting in billions of dollars in losses for investors. Madoff was convicted and sentenced to 150 years in prison. The case highlighted the need for better regulation and due diligence in the financial industry.


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