While we all hope that businesses large and small are out in the world doing the best job possible to be scandal-free, it’s simply not reality. Instead, companies often cut corners or have executives who look for the easy road to navigate lousy PR, poor quarterly numbers, and bloated executive pay. With this in mind, let’s look at some companies ruined by massive scandals.
12. Bernard L. Madoff Investment Securities
Bernie Madoff’s company and associated scandal shocked the financial world.
- Scandal: Ponzi scheme
At the time of Bernie Madoff’s arrest, his investment securities business was the 6th largest market maker among S&P 500 stocks. The arrest ruined the company and wiped out billions of shareholder value.
11. Valeant Pharmaceuticals
The US Attorney speaking about the scandal at Valeant Pharmaceuticals.
- Scandal: Deceptive pricing practices, questionable accounting
The SEC investigated a major pharmaceutical brand, Valeant, for manipulating the market by buying up competitors to drive up the price of its drugs. The company saw its stock price drop 90 percent and had to rebrand completely to avoid public anger.
10. Parmalat
The Parmalat scandal rocked Italy and its business world.
- Scandal: False accounting records
One of the world’s largest dairy and food companies, Italian giant Parmalat, was sold off in pieces after a $20 billion hole was found in its accounting records. The CEO was convicted of fraud and sentenced to 18 years in prison.
9. Adelphia Communications Corporation
John J. Rigas was convicted on multiple counts for the scandal.
- Scandal: Corruption, misappropriation of company resources
A cable television giant for many years, Adelphia Communications Corporation went under in 2002 after it was discovered the founding family was misusing funds for personal luxury purchases. The company would later be sold off to Time Warner Cable.
8. Barings Bank
Mass Mutual Insurance Company purchased Barings Bank assets.
- Scandal: Fraudulent investments
One of England’s oldest merchant banks, Barings Bank, went under in 1995 after suffering hundreds of millions of losses due to fraudulent investments. The bank would later be sold for one pound or $1.31 in American currency.
7. Bear Stearns
Bear Stearns was a banking giant before quickly dissolving.
- Scandal: Subprime mortgages
Bear Stearns was a major victim of the collapse of subprime mortgage housing. This scandal caused the housing market to collapse and ripple throughout the world’s financial sectors.
6. Lehman Brothers
The mortgage crisis quickly shut down Lehman Brothers.
- Scandal: Subprime mortgages
The investment bank giant Lehman Brothers filed for bankruptcy in 2008 after betting heavily on risky subprime mortgages caused by banks lending money to those who couldn’t afford the payments.
5. HealthSouth
HealthSouth’s CEO was indicated as part of a massive fraud case.
- Scandal: Accounting fraud
In 2002, the first signs of scandal appeared after the SEC discovered the insurance company’s earnings were falsely inflated by $1.4 billion. The company was ruined and forced to rebrand before going public again.
4. Turing Pharmaceuticals
Martin Shkreli committed multiple violations as CEO of Turing Pharmaceuticals.
- Scandal: Price gouging life-saving medicine
Martin Shrekli will be forever remembered for upping the price of one of Turing Pharmaceuticals’ drugs by 5,000 percent to boost the company’s bottom line. The resulting scandal forced the company to rebrand, and Shrekli was put in prison.
3. WorldCom
WorldCom CEO was convicted on multiple counts of fraud.
- Scandal: $11 billion accounting fraud
In 2002, WorldCom was a telecom giant, only to be rocked by a $11 billion scandal involving inflated company assets. The resulting scandal led to WorldCom filing for bankruptcy and multiple executives pleading guilty to fraud.
2. Theranos
Theranos was a billion-dollar company built on empty promises.
- Scandal: False claims about testing blood
Theranos is a textbook example of a company ruined by a massive scandal. Promising a revolutionary way to test blood, Theranos couldn’t do anything it promised, and its $9 billion valuation went up in smoke.
1. Enron
Enron’s executive team was quickly convicted of massive fraud.
- Scandal: Accounting scandal, auditing failure, bankruptcy
Enron was the largest bankruptcy in US history at the time after losing $74 billion, and it is undoubtedly the biggest company completely ruined by scandal. Along with Enron, its accounting firm, Arthur Anderson, was also destroyed by the Enron scandal.
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