Chapter 1
Setting the scene
Financial fraud: “a hardy perennial”
“In a boom fortunes are made, individuals wax greedy, and swindlers come forth to exploit that greed.” The experience of thousands of victims of fraud in 2008 and 2009 demonstrates that Charles Kindleberger’s analysis of the close relationship between boom, bust and swindles remains as relevant today as when he first published Manias, Panics and Crashes in 1978. It also suggests that modern regulatory frameworks have done less than might be hoped to reduce the risk for investors of falling victim to a financial scam.
Part of the problem is that many investors can be seduced by the belief that they have found a low-risk way of performing surprisingly well. They will be more easily ...
