Investing is a gamble. No matter what you do, there’s always that risk of losing money. Watch the market closely to pick your investments. Choosing a low-risk stock to invest in while getting the hang of things should help you decide on a higher-risk investment.
Archegos Capital Management claimed to be a family business that helped people manage their assets and finance companies worldwide. That wasn’t the case with a man by the name of Bill Hwang, who trusted Archegos Capital Management with his finances. He ended up losing a massive amount of money in 2021 due to total return swaps. Total return swaps provided Mr. Hwang a way to make payments to Archegos for his investments.
Mr. Hwang has had an awful year, losing 10 billion dollars. Hwang is a New York investor based on Wall Street. The Wall Street Journal reported his loss in March, and Mr. Hwang has since lost a total of 20 billion dollars in the stock market since the first report.
JPMorgan Chase is based in New York City. This business handles investments and banking and is well-known around the world. In 2012, a man by the name of Bruno Iksil used JPMorgan Chase for his investments. What he didn’t know at the time was the amount of money he’d lose through investments and credit default swaps. Credit default swaps allow investors to design a contract where bonds are used to prevent losses. Each investment is insured through the bonds, thereby allowing investors to take chances on certain stocks without losing everything.
Iksil used credit default swaps, but it didn’t work out the way he hoped. In 2012, he ended up losing a total of nine billion dollars. He lost this massive amount of money due to the chief investment office taking chances on large-scale investments. The losses were immense, and the chief investment officer, Ina Drew, stepped down from her position as a result. JPMorgan Chase went through an internal investigation and ended up having to pay 920 million dollars in fines.
Morgan Stanley is an investment banking firm based in New York City. This multinational company has offices in 42 countries with over 60,000 employees worldwide. You’d think utilizing Morgan Stanley’s services would be a superb way to invest your money, but investments don’t always pan out. Howie Hubler made some bad investment choices and holds third place in losses for stock trading. Losing a total of nine billion dollars, Mr. Hubler is a well-known bond trader in the United States.
Hubler made short trades in risky stocks to fund his trades into AAA mortgages, which turned out to be lucrative on his part. These trades weren’t worth as much as he thought, which caused him to lose a large sum of money instantly during the 2007 financial crisis. In turn, it made the situation even worse and landed Hubler the largest single trading loss in United States history. Hubler’s mistake will be remembered forever on Wall Street.
Société Générale is an investment banking firm based in Paris. As the third-largest bank in France, Société Générale is a go-to choice for investors. That wasn’t a good choice for a man by the name of Jerome Kerviel. Kerviel is a French trader by profession. He made some bad decisions in 2008 and was imprisoned for a variety of charges, including breach of trust, forgery, and unauthorized use of bank computers. His poor decisions cost him a total of 6.1 billion US dollars or 4.9 billion Euros. Kerviel created fake trades to keep the money for himself and was eventually caught.
Société Générale hired Mr. Kerviel in 2006 to oversee problems between equity derivatives and cash equity prices. He began creating small, unnoticeable fictitious trades and eventually raised the bar to larger amounts. The bank caught on to his scheme and filed court documents to take responsibility for his actions. Mr. Kerviel was sentenced in 2010 and ordered to go to prison for five years and to pay the full restitution of 6.7 billion dollars that was lost during his time working for Société Générale. Later, in 2014, the court decided Mr. Kerviel wasn’t responsible for paying the amount of money lost during his career.
Founded by Nicholas Maounis, Amaranth Advisors was a hedge fund situated in Greenwich, Connecticut. This business was popular among the elite, with funds over 9.2 billion dollars funneling through the company. Brian Hunter was a natural gas trader responsible for the downfall of Amaranth Advisors. Mr. Hunter was named Co-head of the hedge fund’s energy department and given control of making his trades after receiving a $1,000,000 incentive to join another business. Mr. Hunter stayed with Amaranth Advisors and earned 100 million dollars a year through wise investments. However, things changed, and the business flopped in 2006 due to poor trading options.
Hunter was responsible for the downfall of Amaranth Advisors. He made choices that caused a 6.5 billion dollar loss. Mr. Hunter believed the prices of natural gas would rise in the winter, leading him to invest in certain parts of the industry. However, this didn’t happen, and the market went in a completely different direction. The Commodity Futures Trading Commission later accused Amaranth Advisors and Brian Hunter of conspiring to manipulate natural gas prices. That, coupled with the extensive losses, caused the hedge fund to close.
Long Term Capital Management was a hedge fund based in Connecticut. Founded by John Meriwether in 1994, Long Term Capital Management utilized absolute-return trading to maximize returns. Meriwether started a successful business with a maximum 41% return on accounts, but things quickly changed in 1998 after the Asian and Russian financial crises. Losing a total of 4.6 billion dollars, the company closed, and Meriwether was left with nothing.
After losing 4.6 billion dollars, Meriwether went on to open JWM Partners in 1999. This hedge fund grew to be a popular choice for patrons with an initial $250 million under his management. The business was successful until the financial crisis of 2007. JWM Partners managed three billion dollars for his clients. After the financial problems began, Meriwether realized he would lose clients and funds. That led to the hedge fund being closed in 2008.
As the second-largest pension fund in The Netherlands, PFZW is a non-profit organization. The name stands for Pension Fund and Care For Well Being. While an exact name isn’t listed, the loss obtained by an individual with PFZW was four billion euros. This loss came after an oil futures fund was a bad investment in 2020. Healthcare workers and trade unions control PFZW.
Oil futures are a great way to invest when done correctly. The unnamed person with PFZW did something different to his/her account and ended up losing quite a lot of money. Oil futures uses a predetermined price for stocks on oil and is often sold between people who don’t know each other. If you buy when the cost of oil skyrockets, you’re bound to lose money. When prices are low, you’ll make more money as people are using more of it. Regardless of who this person is, they didn’t make the best investment when buying through PFZW.
Melvin Capital was established in 2014 to manage assets. The company primarily invests in technological-based businesses such as gaming, space, and computers. Founded by Gabriel Plotkin, Melvin capital had eight billion dollars in assets as of January 2021. Problems began during the GameStop short squeeze – an expeditious increase in stock prices. This increase caused people to buy stock in GameStop, including Gabriel Plotkin, quickly. Gabriel bought shares in GameStop and swiftly lost 4.5 billion dollars when the stock price plummeted. This stock price ran upwards of $500 per share – a hefty price to pay for a fad.
Gabriel lost 30 percent of company funds in Melvin Capital when this occurred. The loss caused numerous lawsuits to be filed against Gabriel Plotkin and Melvin Capital. As a Hedge Fund manager, it was Gabriel’s responsibility to help clients choose which stocks to invest in. The GameStop fiasco is still going strong today as the legal battles play out.
Located in New York City, Pershing Square is a hedge fund managed by Bill Ackman. Mr. Ackman utilizes his hedge fund for activist purposes and helps clients do the same. He opened the business with his fund of 54 million dollars and has since made millions for clients. He went wrong when he invested in Valeant Pharmaceuticals. Ackman lost 4.1 billion dollars on the deal in 2016. He joined the Valeant board of directors in 2016 and put a 9% stake in the company. It ended up being their biggest quarterly loss since opening in 2004. Valeant Pharmaceuticals made headlines for a variety of reasons.
The Pharmaceutical company had disputable drug prices, and after things started to go downhill, the board of directors fired the CEO, and Pershing Square sold all of its stock for a massive loss. Mr. Ackman continued to push boundaries and has since bought stock in Chipolte Mexican Grill, JCPenney, and the Canadian Pacific Railway. His failure didn’t seem to phase him, and he continues to make risky investments – some of which pay off. His deal with Chipotle Mexican Grill earned him 2.6 billion dollars when he decided to sell the stock due to an impending market crash.
Based in Japan, the Sumitomo Corporation is one of the biggest worldwide trading companies. Owned and operated by CEO Kuniharu Nakamura, Sumitomo is listed on Japan’s top three stock exchanges. These include Tokyo, Nagoya, and Fukuoka. Considered to be a company that trades within all trading sectors, Sumitomo is one of the top three companies for stock trading in the world. So how does a company over 100 years old lose so much money?
The Chief copper trader, Yasuo Hamanaka, made some bad investment choices and lost the company 2.6 billion dollars due to unauthorized trading. Mr. Hamanaka got himself into heaps of trouble for this aggressive trading and landing himself in prison for seven years. He even earned the nickname “Mr. Copper” for his confrontational tactics used during negotiations. There’s no word on what Mr. Hamanaka is doing now after being released from prison, but I’m sure he isn’t working for the Sumitomo corporation anymore.
Aracruz was a different kind of firm that specialized in manufacturing paper and pulp. The company merged with VCP and changed the way they made paper. The CEO decided it was best to change the company name to Fibria as not to confuse shareholders worldwide. It’s unknown how so much money was lost before Aracruz became Fibria, but two men by the names of Isac Zagury and Rafael Sotero are the responsible parties.
Isac Zagury and Rafael Sotero lost Aracruz 2.52 billion USD. As the story goes, Mr. Zagury and Mr. Sotero utilized FX Options or foreign exchange options to get a set price for stocks within Aracruz. It seems as though that option didn’t work in their favor. It is unknown if these two were Aracruz employees or shareholders.
Orange County, California, offers breathtaking ocean views, stunning sandy beaches, and plenty of boutiques to shop to your heart’s content. It’s one of the most beautiful places in California, so how could the county get into trouble with money? The treasurer and tax collector made some poor decisions regarding county finances. Robert Citron was the tax collector and treasurer for Orange County for many years. He was good at his job, but one poor decision changed everything. He decided to have the county declare Chapter 9 Bankruptcy.
This type of bankruptcy allows counties to make a plan to repay debt collectors and organize county assets. Mr. Citron thought this was the best decision for the county. Mr. Citron’s investments were brought on by using a psychic who told him it was best to declare bankruptcy to cash in on interest rates for the county. His plan ultimately failed, and the county lost a total of $1.7 billion dollars due to his negligence.
Once a significant industrial aggregate in Frankfurt, Germany, Metallgesellschaft was a thriving company with 20,000 employees. It was worth 10 billion dollars and even had several companies specializing in chemicals, financial services, mining, and more. Opened in 1881 as a metal trading firm, Metallgesellschaft thrived until something occurred in 1993 that changed things for the worst. So, where did this company go wrong?
Heinz Schimmelbusch started his career with Metallgesellschaft in 1973 as Chief Executive Officer. He helped the company lean into selling fuel to consumers through MG Refining and Marketing. He obtained a fixed, 10-year price for the oil and started a hedge fund to join in on the oil futures market, but things didn’t go as planned. Mr. Schimmelbusch didn’t think the oil prices would drop in 1993. When the prices started to go down, he lost the company 1.59 billion dollars. Heinz Schimmelbusch lost his job when this occurred, and the company was liquidated into GEA Group Aktiengesellschaft.
Opened due to a merger between Showa Oil Company and Shell Sekiyu, Showa Shell Sekiyu sells oil and energy to consumers. Based in Japan, this company comes from a long line of oil companies dating back to the late 1800s. As part of the oil and energy industries, Showa Shell Sekiyu specializes in refining oil and making solar panels sell globally. Since opening in 1985, Showa Shell Sekiyu has over 900 employees and is worth 29.5 billion US dollars.
Showa Shell Sekiyu landed a spot on our list due to FX Forwards – an agreement between the company and the bank to exchange money at a set rate. Although no name is listed to take responsibility for the loss, Showa Shell Sekiyu lost a total of 1.49 billion dollars in 1993. This loss was a massive hit for the company. In 2015, Shell Sekiyu decided to sell its portion of the company to Idemitsu Kosan and keep only 1.8% of a stake in the company.
As one of the biggest buyers of jet fuel in the Pacific, China Aviation Oil is a thriving business with a net worth of 1.1 billion US dollars. It supplies fuel all over the world. This company opened on May 26th, 1993, and landed itself on the Singapore Exchange in 2001. China Aviation Oil invests in various other stocks, such as Shanghai Pudong International Airport Aviation Fuel Supply.
A man named Chen Jiulin is responsible for a loss of 550 million US dollars for China Aviation Oil. Even though this amount is nowhere near other amounts of money on our list, it was still a massive hit for China Aviation Oil. Chen Jiulin was once the CEO and Managing Director of this thriving business. During his tenure, Chen increased the net worth of the company by 85%. He decided to take a chance on oil futures and options to increase the company’s value, but it didn’t pay out the way he hoped. In 2004, Chen left the company and was arrested for his involvement in the trading.
Based in the United Kingdom, UBS is a Swiss investment banking firm that holds the title of the most extensive banking firm in the world. UBS respects clients and is known for its secrecy in the world of banking. UBS was founded in 1862 and once called the Bank in Winterthur. It merged with the Union Bank of Switzerland and the Swiss Bank Corporation and was given the name UBS in 1998. UBS has multiple vaults, bunkers, and storage options available for gold and other items as well.
Kweku Adoboli is an investment banker and stock trader responsible for a loss of 2 billion US dollars. He worked as a trader for UBS and is well-known for his 2011 UBS Rogue Trader Scandal involvement. Mr. Adoboli illegally and knowingly traded two billion dollars and was arrested for his involvement in the scandal. Kweku was convicted of four counts of false accounting and two counts of fraud by abuse of position. He served under a year in prison for his crime and was released in 2015. Mr. Adoboli was later deported back to his homeland of Ghana.
CITIC Pacific is a multi-industry company based in China. It specializes in real estate, financial services, energy, resources, manufacturing, and more. CITIC Pacific opened in 1991 to better serve the people of China and the rest of the world. The Hong Kong Stock Exchange is the place to find shares of this company. With 287,910 employees and assets nearing 6,0804 billion dollars, this company ended on our list of people who wasted extreme amounts of money?
A woman by the name of Frances Yung was once the director of group finance with CITIC Pacific. She was involved in illegal trading along with two other employees. The trading lost the company 1.89 billion US dollars. Ms. Yung’s unauthorized foreign exchanges caused her to be demoted with a drop in salary. She now works as the Deputy Chairman of Citic Pacific. It sounds like Frances Yung was lucky compared to others on our list. She could have easily ended up in prison or forced to quit.
The now-closed Baring’s Bank was located in London and open from 1762 – 1995 when ING bought it out. As a merchant bank, Barings bank was responsible for investments and commercial loans for businesses. Founded by Frances Baring in 1762, It was the second-oldest merchant bank before being bought out on February 26th, 1995. You might be wondering how something like this could happen to such an institution.
Mr. Nick Leeson held the title of bankrupting Barings Bank in 1995. He was a derivatives trader – a person who manages account fluidity and manages data for clients. Mr. Leeson was designated as a rogue trader – a person who makes unauthorized trades. He made these unauthorized trades between 1992 and 1995, which led to a prison sentence. He pleaded guilty to forging documents and deceiving the stock exchange in Singapore. That led to a six-and-a-half year prison sentence in Singapore. Mr. Leeson was released in 1999. He decided to write a book about his time as a Rogue Trader and his time in prison.
As a Joint-Stock Exchange company, Transneft specialized in the creation of the largest oil pipeline in Russia. Transneft was a leader in the oil pipeline field and boasted the longest pipeline in the world. They created more than 43,000 miles of pipeline. Transneft had many accusations against it over the years, but its downfall began in 2008. As a company owned by the Federal Agency for State Property Management, the government was solely responsible for the pipeline and keeping it safe. However, it wasn’t the government that caused its downfall in 2008.
A man named Alexey Navalny brought accusations against Transneft to the Russian Audit Chamber in 2008. The allegations were against Transneft employees such as Mr. Semyon Vainshtok. He was accused of multiple economic crimes that showed fraudulent shell companies created to funnel money to “contractors” such as Mr. Vainshtok. The problem was that Semyon Vainshtok wasn’t a contractor. He and other employees cost the company four billion US dollars. An internal investigation proved the crimes to be true. It is unknown what happened to Mr. Vainshtok and the other employees.
Located in Frankfurt, Germany, Deutsche Bank is a global investment and financial services company. Located in 58 countries, this bank is well-known as the number one bank in Germany. It also services the United States, Asia, and Europe. Delegated as a universal bank, Deutsche Bank has four divisions to better serve its customers – corporate, private, investment, and asset management banking. It’s listed on the New York Stock Exchange and the Frankfurt Stock exchange for stock buyers.
Deutsche Bank has gone through plenty of controversies over the years, but one that stands out is the case of Boaz Weinstein. Mr. Weinstein is a Hedge Fund Manager who worked at Deutsche Bank from 1998 – 2009. He was responsible for 650 employees and earned the title of Co-Head of Global Trading Credit. The problems came in 2008 when Boaz worked with derivatives – a contract that gets its value from an underlying interest rate, asset, or index. Mr. Weinstein ended up losing the company 1.8 billion US dollars but continued to work there for another year. He was much luckier than others on our list.
Icahn Enterprises specializes in multiple areas of finance in New York City. Some of the company’s areas include energy, automotive, metal, real estate, and more. Opened in 1987 by Carl Icahn, Icahn Enterprises is located in the General Motors Headquarters, giving it plenty of exposure. Icahn Enterprises is notorious for buying and selling real estate such as hotels, automotive stores, and even casinos. This company has a little more than 2,000 employees and yearly revenue of 16.3 billion dollars.
Icahn made a poor investment choice in 2020 that led to a 1.6 billion dollar loss. As a Hedge Fund Manager, Icahn makes and loses money daily, but this loss was something unexpected. The company Hertz – a car rental company, based in Florida, was the cause of the 1.6 billion dollar loss. It’s unclear whether Carl lost the money trying to buy Hertz or if the loss came from trying to sell the company.
BAWAG was a bank based in Austria. It was opened in 1922 and merged with another bank in 2005 to form BAWAG. Founded by Dr. Karl Renner to be a bank for the working class, BAWAG made it easier to receive loans. This bank went through plenty of controversies over the years, with the Refco Scandal being the most prominent. This scandal occurred in 2005 and was the reason for a new merger with a company called Cerberus.
The Refco Scandal occurred in 2005. A man by the name of Wolfgang Flottl was the investment banker responsible. He was responsible for bad loans that cost the bank 1.75 billion US dollars. That caused the bank to almost go into default and be bailed out. The risky investments started in 1998 and were found when the scandal came to light. Mr. Flottl and several other employees went to court and were found guilty of fraud, false accounting, and breach of trust. Mr. Flottl was sentenced to 10 months in prison, while others were sentenced to almost ten years in prison. Mr. Flottl was luckier than most during the trial and sentencing.
Resona Holdings, LLC is the company behind banks such as Daiwa Bank and Asahi Bank. Daiwa Bank was opened in 1918 and was originally called Osaka Nomura Bank. It wasn’t until 1948 and after World War II that that bank was given its name of Daiwa Bank. During that time, it was a popular bank as it was one of the only banks in the area to offer an extensive amount of services such as loans, banking, and trust services. Daiwa Bank ran into some trouble in 1995 when an employed bond trader made some bad decisions in the market.
A man by the name of Toshihide Iguchi was a bond trader and the Executive Vice President for Daiwa Bank. He was based in the United States and accumulated a total of 1.1 billion dollars in losses for the company over 12 years. His first loss was in 1983 and occurred when he lost 70,000 dollars trading in Federal reserve notes. He didn’t tell anyone about the loss out of fear he’d lose his job. After years of hiding his losses, He was eventually caught in 1995. Mr. Iguchi was sentenced to 15 months in prison for concealing the losses.
Soros Fund Management is a private investment firm located in the United States. Founded in 1970 by George Soros, Soros Fund Management specializes in hedge fund management and family investments. The company has clients all over the world and recently reported a profitable quarter. Investments for the Soros Fund include retail, transportation, energy, financial, and more.
George Soros, the creator and owner of Soros Fund Management, is an investor, philanthropist, and billionaire who made some poor decisions for his company. Mr. Soros worked with SP 500 Futures – financial futures that allow investors to decide on stocks based on speculation. Mr. Soros chose to invest in a stock on the S&P 500 and took a massive hit. He lost a total of 800 million dollars in 1987, which was just 17 years into owning his business.
The Hunt Brothers are American billionaires and sons of a Texas oil billionaire. William, Nelson, and Lamar Hunt acquired 195 million ounces of silver one day in the early 1970s. They tried to get into the silver market numerous times to follow in their father’s footsteps. The brothers wanted to be billionaires and thought the silver would help them get what they needed to be like their father. They planned to sell the silver when the market was up. During the 1970s, the price of silver was only $6 per ounce, so they continued waiting until they saw a jump.
It wasn’t until the 1980s that silver prices jumped. The brothers invested much money into silver futures, hoping the price hike would occur. That was dangerous and led to something called Silver Thursday. You see, in March 1980, the price of silver skyrocketed, and the Hunt Brothers tried to sell everything they had, but before they could, the price dropped below what it was before. They ended up losing a billion dollars, and the ensuing panic led many investment firms, banks, and businesses to almost collapse. That led to an investigation into the Hunt Brothers. They had to sell all of their assets to pay back the investment firms.
Opened in 1818, the Groupe Caisse d’Epargne specializes in private banking and investments in the retail sector. This banking group has 4,700 bank branches in the country. Located in France and a popular choice for consumers, the Groupe Caisse d’Epargne is a surprising addition to our list of investments people wasted extreme amounts of money on. This banking firm has popular branches for savings accounts as well as branches specifically for investments.
A man named Boris Picano-Nacci is responsible for a 940 million dollar loss for the Groupe Caisse d’ Epargne. Mr. Picano-Nacci worked with derivatives, contracts that get their value from an underlying interest rate, asset, or index. Boris and a few other employees lost their jobs as a result of derivatives trading.
That is a different type of business than others on our list, but that doesn’t mean it doesn’t have the potential for major losses. Sadia is a food producer based in Brazil, leading the charge on frozen foods for the world. This company was opened in 2009 and continues to grow. Sadia has industrial plants to produce food on a large scale to ship all over the world.
Adriano Ferreira, a former professional tennis player from Brazil, and Alvaro Vallejo are the culprits behind a loss of 1.09 billion US dollars. Announced in 2008 by Sadia, Ferreira and Vallejo worked in the derivatives market and lost the company just over a billion dollars. Although it’s not announced why a former professional tennis player is included in this type of loss, it’s still a lot of money to lose, especially on something like derivatives.
Monte Dei Paschi di Siena is a bank with a rich history dating back to the late 1400s in Italy. It is known as one of the world’s oldest banks still in existence. This bank specializes in commercial, investment, insurance, investment management, and retail banking for businesses in Italy. As a popular choice for companies and investors, this bank recently reported a total of 5.1 million customers using its services. Owned by CEO Marco Morelli, Monte Dei Paschi di Siena has 2,000 bank branches and 26,000 employees. It seems like this bank is going great despite an issue that occurred in 2013.
Beginning in 2009, the Santorini and Alessandria bank branches started to lose significant amounts of money. They, along with the bank president, Giuseppe Mussari, decided to conceal the losses and enter agreements on the derivative market with Deutsche Bank and Nomura to try and gain the money back before it was noticed. Their plan didn’t work, and a loss of one billion US dollars was reported. They were lucky until 2013 when the secrets were revealed. The company had to get a bailout of 5,3 billion US dollars to help the company get back on its feet.
Morgan, Grenfell, and Co. was once a leader in the investment banking world. Based in London, Morgan, Grenfell, and Co. opened in the late 1800s and was a thriving business until it was liquidated and bought out by Deutsche Bank. Mr. Morgan, one of the owners of Morgan, Grenfell, and Co., was well-known for his aggressive tactics when it came to trading. The Guinness Scandal was one of the more well-known scandals for this company.
The Guinness Scandal occurred in 1997 when Peter Young didn’t follow the rules when acquiring shares of a business. He was an aggressive man, like Mr. Morgan, and acted as an advisor to Guinness. Guinness went through a share-trading scandal, and Peter Young’s involvement led to several employees resigning from their jobs, including one of the chief executives. The company lost a total of 660 million dollars and was later bought out by Deutsche Bank. It doesn’t always work out when trying to buy shares of a company, which is proof. It’s better to hire an advisor and work closely with them to find the best stocks to suit your needs.
Founded in 1839, Kidder, Peabody, and Co. was an American Securities Firm specializing in investments, trading, and brokerage. Located in the heart of Boston, Kidder, Peabody, and Co. has a tumultuous history. The first scandal occurred in the 1980s when insider trading occurred. A man by the name of Martin Siegel was an executive and merger specialist within the company, and he caused the insider trading scandal using his investments. If you fast-forward to the 1990s, yet another scandal occurred, this one involving bond trading.
A man by the name of Joseph Jett was behind the Bond Trading Scandal. He was an employee trader working on the government bond desk. Mr. Jett reported false profits for the company by finding a tiny flaw in the system. This flaw led to a 350 million dollar loss, and Mr. Jett was banned from working anywhere on the New York Stock Exchange. He was unable to find a job anywhere due to securities fraud. The company suffered after this loss was discovered and closed its doors in 1994 because of the scandal.