Tuesday, May 19, 2009
The current financial crisis will no doubt give rise to a host of new regulations that will affect corporate law, securities law, M&A, etc. It's worth taking a second to think about the last financial crisis of this magnitude and regulatory changes that followed. Most of us assume that the Crash of 29 was the impetus for the 33 and 34 Acts. That's probably true, but it overlooks the characters of the time who were the face of the collapse and the face of securities fraud. Frank Partnoy recently released his book, The Match King, introducing us to one of the great characters of all time: Ivar Kreuger. Charles Pnozi and Bernie Madoff have nothing on this guy. Not only did Kreuger finance governments all over Europe during the 1920s, but he was also at the center of one the largest securities frauds of all time. He forged the siugnature of Mussolini on bonds, made up accounting statements off the top of his head, created a web of interlocking companies and subs and used dual-class stock and non-voiting shares to control corporations at the expernse of minority stockholders. In the same way that Madoff seems to have become the face of the recent financial crisis, Krueger was able to motivate a host of politicians to act. Not long after his fraud collapse, the US put in place the securities regulatory structure we have today.
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