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wall street scams

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In 2017, These Wall Street Scams Cost Americans $1.94 Billion

By , Associate Editor, Money Morning -

wall street scams

In 2017, Wall Street scammers made off with nearly $2 billion.

And that's from just five incidences alone.

Have a look...

Sorry, the Paradise Papers Won't Make Billionaires Pay Their Fair Share

By , Associate Editor, Money Morning -

Paradise Papers

The Paradise Papers scandal that made headlines this past Sunday (Nov. 5) certainly shocked the world.

But we've seen this scandal countless times before.

There's no reason to believe that this time would warrant significant changes be made on average taxpayers' behalf.

Here's why...

Caterpillar’s $4.2 Billion Tax Evasion Scheme Started as a Whistleblower Leak

By , Money Morning -

tax evasion

Caterpillar's alleged tax evasion scheme for which the feds conducted a raid recently isn't something new.

In fact, a company whistleblower alerted authorities to the Fortune 500 firm's scandalous behavior years ago.

Regardless of the obvious history involved, though, CAT's current CEO insists the recent bust came as a complete shock...

Wells Fargo Scam Not Unique – Other Banks Do the Same Thing

By , Associate Editor, Money Morning • @DavidGZeiler -

Wells Fargo scam

The evidence is mounting that the Wells Fargo scam was not unusual practice in the banking industry, which means investors need to brace for similar scandals at other banks.

The heavy pressure on workers to "cross-sell" multiple products to the same customer is what got Wells Fargo into hot water - and is accepted practice at most consumer banks.

These are the banks most likely to end up in regulators' crosshairs next...

The Real Wells Fargo Scam Is a Reckless "Do Whatever It Takes" Culture No One Stopped

By , Associate Editor, Money Morning • @DavidGZeiler -

Wells Fargo scam

The Wells Fargo scam reveals how deeply rooted the culture of rule breaking had become at the big bank.

But the employees aren't nearly as much to blame as the top management, which created an atmosphere so hostile and threatening that workers had almost no choice but to engage in unethical behavior.

Here's the shocking truth - and why it was allowed to go on for years...

How the Wells Fargo Scam Pulverized Customers' Credit Scores

By , Money Morning -

Wells Fargo scam

The massive Wells Fargo scam continues to grow in its lethality.

Now, affected customers are looking at collateral financial damage.

Here's more...

How Russian Spies Nearly Hatched a U.S. Stock Market Crash

By , Money Morning -

Russian spies

Last year, three Russian spies were caught operating on Wall Street.

Their comprehensive plan was to upend the U.S. stock market - here's how...

Corporate Corruption – Summed Up in One Dilbert Cartoon

By , Associate Editor, Money Morning • @TaraKateClarke -

corporate corruption

Corporate corruption is so rampant it's laughable, and this Dilbert cartoon sums it up nicely.

Visit Money Morning for the top stories on Wall Street's bad behavior. Here are the latest...

Sorry CNBC, but the $13 Billion JPMorgan Fine Was No Shakedown

By , Economist, Money Morning -

Many in the financial world seem to think that the $13 billion fine the government slapped on JPMorgan was excessive. But this was no first offense. JPMorgan, like other Too Big To Fail Banks, has a long and sordid track record of misdeeds.

The scary thing is, that monster fine is just a tiny hint of what's been going wrong with Wall Street...

How to Protect Your Portfolio Against One of Wall Street's Greatest, Best Kept Secrets

By , Chief Investment Strategist, Money Map Report • @kfgtotalwealth -

"Can't anybody tell the truth anymore?" an exasperated Bob J. asked me at a recent cocktail reception.

"Evidently not" I told him.

Bob had seen me earlier that afternoon on Fox News. I appeared on the show to respond to a new study on corporate earnings by Professors Ilia Dichev, Shiva Rajgopal of Emory University and John Graham of Duke.

The study found that a full 20% of publicly traded companies lie about their earnings.

The shocking thing is that the figure wasn't much higher. Twenty percent strikes me as abnormally low. Earnings manipulation is one of Wall Street's greatest, best-kept secrets and has been for years.

In fact, CFOs I've met over the years have told me they could routinely swing things within 5-10% of the target earnings per share (EPS) if needed - a figure in line with the one cited in the study.

But lie is a big word.

As I noted during my interview, there are all kinds of reasons why companies manipulate the numbers, beginning with the terribly flawed system itself.

As appalling as this thought may be, the system actually encourages this kind of behavior.

Under the current system, the law requires quarterly performance reports when many publicly traded companies actually operate in business cycles that are 1, 3, 5, or even 7 years long.

This creates a disincentive to report what's actually happening and an incentive to "lie" about the numbers or at least "fudge" them, depending on your perspective. And, the longer the business cycle, the more a company must make estimates about quarterly results with the risk, of course, that things don't turn out as management expects.

So while some companies may have lost their ethical and moral compasses, what they are doing is entirely legal.

Why Companies Lie About Earnings

Having spent more than 20 years in the markets, I believe the reason for this comes down to three biggies, for lack of a better term. Companies may "lie" to boost stock prices, smooth earnings and jack up compensation packages.

Virtually every publicly traded company draws on reserves and engages in all kinds of financial hocus-pocus in an effort smooth things out.

Take Boeing Co. (NYSE: BA), for instance.

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