17 Shocking Wall Street Scandals

Wall Street has had its share of scandals over the years. Some were so big and shocking that they made headlines around the world. These events involved huge sums of money and powerful people, shaking the financial industry to its core. Here are 17 Wall Street scandals that surprised everyone and had a lasting impact.

1. Black Tuesday – 1929 Stock Market Crash

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Black Tuesday, the stock market crash of 1929, marked the beginning of the Great Depression. This catastrophic event resulted from speculative bubble bursting and led to a decade-long economic crisis.

2. Charles Ponzi’s Scheme – 1920

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Charles Ponzi’s fraudulent investment scheme in 1920 is one of the earliest examples of a pyramid scheme. Investors were promised high returns, but Ponzi was paying earlier investors using the investments of new clients.

3. The Savings and Loan Crisis – 1980s

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The Savings and Loan crisis of the 1980s was a widespread failure of savings and loan associations in the United States. Deregulation, poor lending practices, and economic downturn contributed to this massive financial disaster.

4. Junk Bond Scandal – Late 1980s

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The Junk Bond scandal, primarily associated with Michael Milken, involved the illegal use of high-yield bonds for hostile takeovers and leveraged buyouts. It led to significant losses and the fall of prominent figures in the finance world.

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5. Nick Leeson and Barings Bank – 1995

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Nick Leeson’s unauthorized speculative trading led to the collapse of Barings Bank in 1995. His activities resulted in losses amounting to over $1 billion, leading to the bankruptcy of the UK’s oldest investment bank.

6. Long-Term Capital Management Collapse – 1998

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Long-Term Capital Management, a hedge fund, collapsed in 1998 due to high-leverage and speculative trading strategies. This led to a significant bailout organized by the Federal Reserve to prevent a wider financial crisis.

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7. Enron Scandal – 2001

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The Enron scandal, one of the biggest accounting frauds in history, involved hiding debts and inflating profits. It led to the bankruptcy of Enron and the dissolution of Arthur Andersen, one of the big five accounting firms.

8. WorldCom Scandal – 2002

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WorldCom’s scandal in 2002 was another major accounting fraud. The company exaggerated its assets by billions of dollars, leading to one of the largest bankruptcies in history at the time.

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9. Bernie Madoff’s Ponzi Scheme – 2008

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Bernie Madoff’s Ponzi scheme, uncovered in 2008, is considered the largest in history. He defrauded investors of billions of dollars over decades, leading to significant financial losses for individuals and institutions.

10. Lehman Brothers Collapse – 2008

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The collapse of Lehman Brothers in 2008 was a pivotal moment in the global financial crisis. Its bankruptcy was the largest in U.S. history and intensified the worldwide economic downturn.

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11. Subprime Mortgage Crisis – 2007-2010

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The Subprime Mortgage Crisis, which peaked from 2007 to 2010, was caused by banks giving mortgages to high-risk borrowers. This led to a housing bubble burst and was a major factor in the global financial crisis.

12. LIBOR Scandal – 2012

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The LIBOR scandal involved major banks manipulating the London Interbank Offered Rate, a benchmark interest rate. This unethical practice affected loans and mortgages worldwide.

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13. JPMorgan Chase “London Whale” – 2012

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JPMorgan Chase’s “London Whale” incident in 2012 involved trades that resulted in over $6 billion in losses. The scandal brought to light the risky trading practices in derivatives by the bank’s traders.

14. Forex Manipulation Scandal – 2014

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In 2014, several major banks were fined for manipulating the foreign exchange market. Traders were found colluding in online chat rooms to manipulate benchmark exchange rates.

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15. Wells Fargo Account Fraud Scandal – 2016

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The Wells Fargo account fraud scandal involved employees creating millions of fraudulent savings and checking accounts on behalf of Wells Fargo clients without their consent, leading to a major crisis of trust in the bank.

16. 1MDB Scandal – 2015

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The 1MDB scandal involved the Malaysian government’s investment fund, 1Malaysia Development Berhad. Billions of dollars were embezzled, leading to investigations in several countries and the involvement of major financial institutions.

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17. Wirecard Scandal – 2020

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The Wirecard scandal, a German payment processor and financial services company, involved a missing $2 billion from its accounts. It led to the company filing for insolvency and raised questions about regulatory oversight.

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