6 Biggest Financial Scandals That Shook The World

When people put their trust and money into a company or stock, they expect that they are being treated honestly and fairly. Unfortunately, this isn’t always the case. There are several examples of financial scandals being orchestrated by individuals and companies that go on to cost people billions.

Many of these scandals and the widespread fraud associated with them has led to better fraud prevention solutions for individuals and businesses alike. But even with all of these measures, protections, and various other things in place to ensure everything is done by the book, sometimes, things go off the rails. 

With that in mind, this article is going to go over six of the biggest financial scandals that shook the world.


This is a classic example and one that many people have likely heard of. Enron was a massively popular energy company and a stock market hit in the late 1990s. Unfortunately, all of this popularity and their high stock price was all a result of fraud.

The company was exaggerating the value of many of their assets, and even falsifying financial statements and moved billions of dollars of debt to appear in a better financial situation. Eventually, this became unsustainable and things blew up. Shareholders lost a whopping $74 billion as a result of the scandal and company leaders were arrested.

Ponzi Scheme

While not the biggest or first to do this kind of scheme, Charles Ponzi made it famous. A known con artist, Charles Ponzi promised large returns and little risk if people bought into his business. The idea was that they would buy international postal reply coupons, and then redeem them in the USA where their value was higher.

But in reality, there was no value here. He was simply making it look like everyone was getting rich by using the money that new investors put in, to pay off the older clients to make it seem authentic. Thus the Ponzi scheme was born and many companies and individuals have done similar things in the following years and decades.

Bernie Madoff

Madoff was the creator of the largest Ponzi scheme in history. Madoff, a hedge fund manager with a respected investment firm, became popular for his ability to beat the market and consistently provide great returns to those who trusted him with their money.

This seemed too good to be true, and that’s because it was. He was running a classic Ponzi scheme, likely for decades, and had betrayed the trust of thousands, and cost them billions. Madoff received a 150-year prison sentence as a result of this scandal, and was actually turned in by his sons after he confessed to them what was going on.


WorldCom was an incredibly large telecom company in the 1990s. During their height, company value was believed to be $180 billion, and many believed that they were a good stock to purchase and own. However, in 2002, accounting fraud to a large degree was discovered and the company failed.

They did a variety of shady and fraudulent things to make their company look healthier and in better shape than they actually were. This included inflated revenue,  made expenses look like investments. Overall, their profit was overstated by around $7 billion, which was eventually discovered and led to the collapse of the firm.

Global Financial Crisis of 2008

While not like the other scandals, we felt that this deserved a place on this list. It wasn’t outright fraud like some of these other examples, but there were certainly some shady things going on that helped to contribute and lead to the crisis that impacted millions of people all over the world and led to a recession.

First, rating agencies were essentially paid off to make risky investments seem more stable and high-quality. This was a major conflict of interest, and betrayed the trust of investors. Also, those looking for mortgages were encouraged to exaggerate their assets to get mortgage applications removed, and banks would often provide mortgages to those who they knew couldn’t afford them.


Tyco is a security company that is still in operation today, but had one of their darkest days as a company in 2002. The Tyco scandal centered around CEO Dennis Kozlowski and CFO Mark Swartz. These two lived a very extravagant lifestyle, and paid for it by stealing from their company.

They embezzled a staggering $150 million from the company and used it to fund their splurging and to live how they wanted to live. In addition to the theft, it was also revealed that these two inflated the income of their company by around $500 million, before finally being caught.

In conclusion, we hope that this article has helped you learn more about some of the biggest financial scandals of all time.

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