“Readers are unlikely to find a more readable explanation of how the financial system has changed since the 1980s and who came unstuck.” —Financial Times
The still-unfolding financial story is terrifying. One by one, major corporations such as Enron, Global Crossing, and WorldCom are imploding all around us, prey to a greed-driven culture and dubious or illegal corporate finance and accounting. We have reached a perilous crossroads.
In a compelling and disturbing narrative, Frank Partnoy brings to bear all of his skills and experience as a securities attorney, financial analyst, and law professor to tell the story of the rise of the trading instruments and corporate financial structures that now imperil the economic health of the country. Starting in the mid-1980s, he documents how each new level of financial risk and complexity obscured the sickness of corporate America. Finally, Partnoy offers clear policies that can save our financial system.
The still-unfolding financial story is terrifying. One by one, major corporations such as Enron, Global Crossing, and WorldCom are imploding all around us, prey to a greed-driven culture and dubious or illegal corporate finance and accounting. We have reached a perilous crossroads.
In a compelling and disturbing narrative, Frank Partnoy brings to bear all of his skills and experience as a securities attorney, financial analyst, and law professor to tell the story of the rise of the trading instruments and corporate financial structures that now imperil the economic health of the country. Starting in the mid-1980s, he documents how each new level of financial risk and complexity obscured the sickness of corporate America. Finally, Partnoy offers clear policies that can save our financial system.
Frank Partnoy is a professor at the University of San Diego School of Law. He has worked as an investment banker, derivatives broker, and criminal defense and securities attorney. He also consults on regulation of the markets and white-collar crime, and has provided expert testimony before the Senate committee investigating the Enron collapse. Partnoy is the author of F.I.A.S.C.O.: Blood in the Water on Wall Street. He lives in San Diego, California.
In 1984, Andy Krieger, a young Wharton grad and former Sanskrit scholar, began his career at Salomon Brothers trading currency options. It was an obscure and complicated new business, yet in a firm that included such legends as John Meriwether and Paul Mozer, Krieger invented a new way to make money. Hedging risky bets on the movement of currencies, he made $30 million in his first year, and ten times that a few years later. But as his trades became frighteningly large and complex, Krieger unwittingly became patient zero in the plague of corruption that now threatens American business to its very foundations.
In a compelling and disturbing narrative, Frank Partnoy brings to bear all of his skills and experience as a criminal defense attorney, financial analyst, law professor, and best-selling author to tell the story of the rise of the trading instruments and corporate financial structures that now imperil the economic health of the country. Starting in the mid-1980s with the introduction of the first currency options and proto-derivatives, and taking us through such high-profile disasters as Barings Bank and Long-Term Capital Management, Partnoy traces a seamless progression to the dangerous manipulations that are coming to light today. He documents how each new level of financial risk, loss of control, and complexity obscured the sickness of the companies in question and pushed individuals to ever more ingenious deceptions.
The still-unfolding financial story is terrifying. One by one, major corporations such as Enron, Global Crossing, and WorldCom are imploding all around us, prey to a greed-driven culture and to dubious or illegal corporate finance and accounting. Our financial system has suddenly reached a perilous crossroads. Although the story becomes more alarming with each new headline and disclosure, Partnoy offers a clear vision of how we reached epidemic stage and how we can regain control before further damage is done.
In a compelling and disturbing narrative, Frank Partnoy brings to bear all of his skills and experience as a criminal defense attorney, financial analyst, law professor, and best-selling author to tell the story of the rise of the trading instruments and corporate financial structures that now imperil the economic health of the country. Starting in the mid-1980s with the introduction of the first currency options and proto-derivatives, and taking us through such high-profile disasters as Barings Bank and Long-Term Capital Management, Partnoy traces a seamless progression to the dangerous manipulations that are coming to light today. He documents how each new level of financial risk, loss of control, and complexity obscured the sickness of the companies in question and pushed individuals to ever more ingenious deceptions.
The still-unfolding financial story is terrifying. One by one, major corporations such as Enron, Global Crossing, and WorldCom are imploding all around us, prey to a greed-driven culture and to dubious or illegal corporate finance and accounting. Our financial system has suddenly reached a perilous crossroads. Although the story becomes more alarming with each new headline and disclosure, Partnoy offers a clear vision of how we reached epidemic stage and how we can regain control before further damage is done.
"Partnoy has written an important book that provides a well-reasoned blueprint for fighting corporate corruption and restoring the integrity of America's financial markets. Unfortunately, it appears that the cops on Wall Street and the regulators in Congress are not ready to heed his advice."—Robert Bryce, The Washington Post Book World
"It's hard not to seethe after reading Partnoy's fascinating, illuminating and enraging account of the last fifteen years of high-finance."—Salon.com
"Deftly traces the deterioration of market efficiency and safety in dozens of stories of bad behavior."—The New Yorker Observer
"Partnoy has written an important book that provides a well-reasoned blueprint for fighting corporate corruption and restoring the integrity of America's financial markets. Unfortunately, it appears that the cops on Wall Street and the regulators in Congress are not ready to heed his advice."—Robert Bryce, The Washington Post Book World
"Imbued with a deep understanding of finance."—Roger Lowenstein, The Wall Street Journal
"Ambitious . . . A useful book, bringing together details of half-forgotten scandals from the past fifteen years."—Floyd Norris, The New York Times Book Review
"Readers are unlikely to find a more readable explanation of how the financial system has changed since the 1980s and who came unstuck."—Financial Times
"Partnoy explains just about every significant financial blowout of the past fifteen years, from Gibson Greetings to Global Crossing, via Joseph Jett, Nick Leeson, Orange County, Long-Term Capital Management, Enron and many others."—Investors Chronicle
"A breathtaking chronicle of greed and stupidity on an operatic scale . . . A compelling portrait of corruption on the scale of the last days of Rome."—Management Today
0"A robust case . . . for the exceptional circumstances of the past fifteen years. Partnoy's protagonists are . . . a parade of macho or geeky grotesques with overdeveloped quantitative skills . . . The pursuit of self-interest and maximum pay-off trickled down from traders to CEOs to equity analysts."—The Guardian
"An original [analysis] reversing the popular perception that Enron was a profitable company that should have survived, while WorldCom and Global Crossing had no economic substance."—Publishers Weekly
"Partnoy makes it appallingly clear that as these hedges against debt have evolved and become increasingly convoluted, the number of takers who will never understand them, much less profit from them, has continued to swell. For example: one structured note's terms included a variable based on the number of wins by the NBA's Utah Jazz. Partnoy makes a telling point in stressing that Enron's deals and those of other now-scandal-plagued companies were basically not illegal and were all enumerated in annual reports in some occluded form or other. Perhaps the worst news for investors is that in Partnoy's view the government's response, last summer's Sarbanes-Oxley Act, was 'weak and limited' because Congress 'had no blueprint' and was merely responding to public pressure to place blame. The markets today are 'like Swiss cheese,' he claims, 'with the holes—the unregulated places—getting bigger every year as [rules beaters] eat away at them from within.' Riveting."—Kirkus Reviews
"Deftly traces the deterioration of market efficiency and safety in dozens of stories of bad behavior."—The New Yorker Observer
"Partnoy has written an important book that provides a well-reasoned blueprint for fighting corporate corruption and restoring the integrity of America's financial markets. Unfortunately, it appears that the cops on Wall Street and the regulators in Congress are not ready to heed his advice."—Robert Bryce, The Washington Post Book World
"Imbued with a deep understanding of finance."—Roger Lowenstein, The Wall Street Journal
"Ambitious . . . A useful book, bringing together details of half-forgotten scandals from the past fifteen years."—Floyd Norris, The New York Times Book Review
"Readers are unlikely to find a more readable explanation of how the financial system has changed since the 1980s and who came unstuck."—Financial Times
"Partnoy explains just about every significant financial blowout of the past fifteen years, from Gibson Greetings to Global Crossing, via Joseph Jett, Nick Leeson, Orange County, Long-Term Capital Management, Enron and many others."—Investors Chronicle
"A breathtaking chronicle of greed and stupidity on an operatic scale . . . A compelling portrait of corruption on the scale of the last days of Rome."—Management Today
0"A robust case . . . for the exceptional circumstances of the past fifteen years. Partnoy's protagonists are . . . a parade of macho or geeky grotesques with overdeveloped quantitative skills . . . The pursuit of self-interest and maximum pay-off trickled down from traders to CEOs to equity analysts."—The Guardian
"An original [analysis] reversing the popular perception that Enron was a profitable company that should have survived, while WorldCom and Global Crossing had no economic substance."—Publishers Weekly
"Partnoy makes it appallingly clear that as these hedges against debt have evolved and become increasingly convoluted, the number of takers who will never understand them, much less profit from them, has continued to swell. For example: one structured note's terms included a variable based on the number of wins by the NBA's Utah Jazz. Partnoy makes a telling point in stressing that Enron's deals and those of other now-scandal-plagued companies were basically not illegal and were all enumerated in annual reports in some occluded form or other. Perhaps the worst news for investors is that in Partnoy's view the government's response, last summer's Sarbanes-Oxley Act, was 'weak and limited' because Congress 'had no blueprint' and was merely responding to public pressure to place blame. The markets today are 'like Swiss cheese,' he claims, 'with the holes—the unregulated places—getting bigger every year as [rules beaters] eat away at them from within.' Riveting."—Kirkus Reviews
