Insurance companies, investment banks and hedge funds are among the most frequent repeat industry offenders of laws governing the financial services industry, new research shows.
Tiburon Strategic Advisors, Tiburon, Calif., discloses this finding in a report, “Financial Services Industry Stumbles: An Ongoing Series of Missteps.” The study recaps instances when financial institutions engaged in, among other things, insider trading, mutual fund scandals and Ponzi schemes.
The report reveals that the number of financial services industry stumbles has reached 40, up from one-to-five in the 1900s to 2007. The cumulative number of financial services industry stumbles has reached 85, up 4,500 percent since the 1900s and almost 100 percent since 2007.
Among the report’s other key findings:
- The financial impact of financial services industry stumbles has reached $1.1 trillion, up from $200 to $500 million in 1986 to 1991
- The cumulative financial impact of financial services industry stumbles reached $1.1 trillion, up from $200 to $500 million in 1986 to 1990
- Financial services firms paid $10.7 billion in settlements
- Financial institutions borrowed $700 billion from the federal government in 2008 under the Economic Stabilization Act, significantly, more than any time in history
- Nearly half of firms sued in class action lawsuits in 2008 were financial services companies
- Almost two-thirds of class action lawsuits will likely reach some settlement
- Settlements of class action lawsuits tend to be for small shares of plaintiffs’ maximum claims
- The Securities Industry Protection Corporation has paid out to 625,000 investors since its inception
- The Securities Industry Protection Corporation has paid out $508 million to investors since its inception
- The US government extended an $85 billion loan to American International Group in exchange for an 80% equity stake
- American International Group (AIG) drew down its entire credit line and went back for more, pushing the US Government’s investment to $123 billion
- American International Group lost $62 billion in the fourth quarter of 2008, the largest quarterly loss in US history