For the rest of the week we’ll be bringing you our massive list of the 55 Most Out of Control Stock Traders in 3 parts. Given all the financial panic and the fast approaching Mischief Night before Halloween, we figured now is as good a time as any to scare the crap out of you with these recounted tales of greed and woe. Without further ado here is today’s installment, Part 1 which shows off #’s 1 through 19 on our list of the top 55.
As far as famous stock traders go, these guys are no Jesse Livermore (considered by some to be the World’s Greatest Stock Trader) or Warren Buffett, but they certainly made quite a name for themselves, albeit infamous ones. Sometimes work alone, others collaborate in groups. Either way, the following stock traders, investors & hedge fund managers are indicted rogues, responsible for diabolical fraud leaving a trail of wreckage the world over. What is shocking and more inexcusable is the seniority of those committing these crimes. What shouldn’t surprise you is the motive… unadulterated greed.
1.) Jerome Kerviel
When stock markets began to stumble in recent days, the French bank known as Societe Generale found something interesting. They had managed to uncover a startling $7.14 billion dollar fraud, one of the biggest in history. All of this was committed by a single futures trader, Jerome Kerviel, who perpetrated a string of fictitious business transactions.
Traded for: Societe Generale
What happened: Jerome Kerviel falsified records, made use of falsified records and perpetrated computer fraud.
Damage done: At least 5.5 billion euros worth of damage.
Currently serving: Jerome Kerviel has been arrested and is currently awaiting trial.
2.) Nick Leeson
Nick Leeson was a rogue trader who utilized sleight of hand in financial derivatives in order to defraud people in a $1.4 billion dollar sea of debt. He was charged with making misrepresentations and forgeries as well as defrauding Barings Futures Singapore and SIMEX.
Traded for: Barings Bank
What happened: Nick Leeson is responsible for numerous forgeries and misrepresentations that were conducted in order to conceal unauthorized deals while trading in the Singapore International Monetary Exchange.
Damage done: $1.4 billion dollars in damage.
Served: 6.5 years in a Singapore jail
3 & 4.) Ralph Cioffi and Matthew Tannin
Between March and June in 2008, Operation Malicious Mortgage involved charging 406 defendants in 144 mortgage fraud causes. Two individuals involved in these cases included Ralph Cioffi and Matthew Tannin from Bear Stearns. Ralph Cioffi and Matthew Tannin were responsible for, in other words, royally screwing Bear Stearns over.
Banked for: Bear Stearns
What happened: These individuals encouraged investors to stay with their current hedge funds which were under heavy exposure from sub prime mortgages, even when the credit market was clearly in serious trouble.
Damage done: $1 billion dollars as well as the beginning of the domino effect that led to the demise of Bear Stearns.
Currently serving: As many as twenty years in prison.
5 – 12.) Eight Rogues from Cazenove
It seems that even the Queen of England cannot escape the rogue activity of dodgy traders. Eight traders working for Her Majesty’s stockbroker were raided by police and watchdogs in the biggest insider trading crackdown ever seen earlier in 2008. Among those involved were Malcolm Calvert, a 64 year older trader and partner in Cazenove. Malcolm Calvert, the ring leader of the group, was charged with 12 different counts of insider dealing involving more than £1m worth of shares though he is still denying the charges.
Banked for: Cazenove, a client of the Queen of England.
What happened: Insider dealing.
Damage done: Illegal dealing on £1m worth of shares.
Currently serving / charged: Charges have been filed but no one is currently serving jail time.
13 – 17.) Guinness share-trading fraud
(Ernest Saunders, Gerald Ronson, Jack Lyons, Anthony Parnes, Ivan Boesky not pictured )
The Guinness share-trading fraud is a famous British business scandal that occurred during the 1980s and was perpetrated by Ivan Boesky, Ernest Saunders, Gerald Ronson, Jack Lyons and Anthony Parnes. It involved the manipulation of the stock market on a very large scale in order to inflate the price of Guinness shares, assisting a $2.7 billion dollar take over in the process.
Who: Ivan Boesky, Ernest Saunders, Gerald Ronson, Jack Lyons and Anthony Parnes
Banked for: Independent
What happened: Defendants bought shares using an unfair price guarantee to create a hostile takeover using Guinness shares.
Damage done: Bought $300 million dollars of Guinness stock in an attempt for a $2.7 billion dollar takeover.
Currently serving: Saunders is serving five years, Ronson is serving one year and Parnes is serving two and a half years.
18.) Michael Lauer
Who: Michael Lauer
Banked for: Lancer Management Group and Lancer Management Group II
What happened: Lied about the hedge funds’ valuations, manipulated prices in seven securities, lied to investors about his holdings in fake portfolio statements and falsely represented his holdings in newsletters.
Damage done: More than $500 million dollars.
Currently serving: Charges have been filed but Michael Lauer has not yet gone to trial.
19.) Frank Gruttadauria
A former analyst for Lehman Brothers, Frank Gruttadauria confessed that he was part of an elaborate scheme that defrauded his clients of millions of dollars by sending them fake statements showing transactions that never occurred as well as earnings that never existed. According to lawsuits filed by some of these clients, the money was meant to be used in profitable investments but it was instead used to pay back customers who wanted to make withdrawals on their accounts when the money was no longer there. Frank Gruttadauria also used this money for his own personal gain, making purchases that included a private jet and a condominium. Lehman Brothers offered to return the money to those who had fallen victim to Frank Gruttadauria’s scheme, though many clients chose instead to file lawsuits against the Lehman Brothers firm and two other firms where Frank Gruttadauria had been employed. Lehman Brothers did agree to pay $25 million dollars to investors who lost money in the fraud, along with $25 million dollars to the SEC, $25 million dollars for stock research and an additional $5 million for investment education.
Who: Frank Gruttadauria
Invested for: Lehman Brothers
What happened: 20 years of fraud
Damage done: More than $25 million
Currently serving: Charges have been filed.