To devise a winning game plan, one must first understand the dangers of the game. Today, truth is stranger than fiction as we've been shocked by recent financial scandals and revelations:
1. MF Global, previously run by Jon Corzine, former Governor of New Jersey, Goldman Sachs CEO and U.S. Senator, declared bankruptcy last October and the company is involved in the alleged disappearance of $1.6 billion in customer funds.
2. Last week PFGBest, based in Cedar Falls, Iowa, filed for bankruptcy after its CEO attempted suicide and had allegedly misappropriated some $200 million of customer funds over the last 20 years.
3. J.P. Morgan JPM+0.14% lost $5.8 billion in the "London Whale" affair and recently notified U.S. regulators of evidence of possible additional wrongdoing in its trading unit as the "tempest in a teapot" grows.
4. Libor manipulation allegations cost Barclays $450 million in fines for its activities between 2007 and 2009 that the Federal Reserve may have known about in 2008. The investigation is spreading to other major banks in Europe and the United States.
5. Raj Rajaratnam and Rajat Gupta are convicted of insider trading in connection with hedge fund, Galleon Group.
6. Texas billionaire R. Allen Stanford is convicted of a $7 billion Ponzi scheme covering 20 years.
So it has been an active few months for breathtaking financial scandals, and of these headline makers, Libor will likely be the biggest. The Justice Department is working up a criminal investigation surrounding the case, the U.S. Congress and various states attorneys general are interested in who knew what when and who did what to whom, while regulators in Europe and the U.S. are also digging into the allegations.
