It's a strange, strange world we live in, Master Jack.

Tuesday, February 24, 2015

Because financial fraud is timeless


On February 21, 1814, during the Napoleonic Wars between the French Empire and its opposing forces (the Bourbons supported by the UK and other nations), a man calling himself Colonel du Bourg arrived in Dover, England, and began spreading word of Napoleon’s death. His news of the Bourbon’s victory quickly spread, and was verified by numerous other military officers who delivered the news to London and surrounding areas. In response to the newly established peacetime, the London Stock Exchange experienced a market boom, and prices on government securities skyrocketed.

However, word from French officials soon arrived, stating that the news of Napoleon’s death had been false. Stock market prices returned to their original levels, but not before several massive sales had taken place. Detecting possible fraud, the London Stock Exchange Committee began investigating the sales in question. They quickly discovered that a large collection of government stocks had been purchased a week prior to the news of Napoleon’s death, and had been sold for more than one million British Pounds. 

The committee charged Parliament member and former Naval enlistee Lord Cochrane with financial fraud, fined him (and his conspirators) 1,000 Pounds apiece, and sentenced them to twelve months in prison, as well as an hour of confinement in a public pillory.

Source: Johnson, P. (2002). Fraud and Profit in Nineteenth Century London 
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Damien's note: The reprehensible Lady Catherine de Bourgh appeared in Jane Austen's Pride and Prejudice, published in 1813, the year before the scam. One assumes the slight similarity in names is a coincidence.

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