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10 things learnt from the biggest fraud.

Enron, WorldCom, Bernie Madoff, FTX, Lehman Brothers.



    1. Enron, company to trade future income in natural gas, oil.

    Hedge against any loss with future income.

    2. Fraud companies were built mostly around the hype.

    3. a) All of these companies have higher ups political connections, trust and support. b) Deal with something which is so complex that you don't need to explain it. c) Limit the supply to control out the prices.

    4. With Enron, CFO was shifting all of companies bad assets to special purpose entities before the end of financial year so that a clear accounts can be built up.

    5. The selling of company would happen at a promissory note.

    6. Pipe funds, in which hedge fund would buy out the stock at a lower price.

    7. Controlling Risk in Financial industry a) Just disclose everything you have. If it's a loss, it's a loss. If it's a gain, it's a gain. b) Risk, every transaction has to have risk.

    8. Ftx saga, If something is FTX happens than Alameda would buy it and If anything happens to Alameda, FTX would buy it.

    9. A 1% move in derivatives wiped out the 100% of Leon brothers.

    10. Blowing up these frauds took the entire industry with them similar to Contagion Risk.

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