Equity Funding was one of the great corporate frauds of the 1970s. The US company grew rapidly by issuing 60,000 phoney insurance policies. Stanley Goldblum, the chief executive, and five of his colleagues went to prison.
Astonishingly, many people in Equity Funding knew about the fraud, and the company made the mistake of firing one of them, Ronald Secrist. He told his story to the New York insurance commissioner and to a tenacious Wall Street securities analyst, Ray Dirks. Both began investigations.
Perhaps as a result of Mr Dirks’ inquiries, the price of Equity Funding stock began to slide. As panic spread, the New York Stock Exchange suspended trading. A week later, the company filed for bankruptcy.
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