“Crashes and panics often are precipitated by the revelation of some misfeasance, malfeasance, or malversation (the corruption of officials) that occurred during the mania. One inference is that swindles are a response to the appetite for wealth (or plain greed) stimulated by the boom; the Smiths wanted to keep up with the Joneses and some Smiths engage in fraudulent behavior to do so. As the monetary system gets stretched, institutions lose liquidity and as unsuccessful swindles seem about to be revealed, the temptation to take the money and run becomes virtually irresistible.” -Charles P. Kindleberger, Manias, Panics and Crashes

This quote was recently brought to mind as a result of the sheer volume of fraud that has been uncovered recently. It’s a testament to just how much greed has been stimulated by the boom and validates the fact we currently find ourselves in the midst of a mania. Most recently, I was struck by the blatantly fraudulent photo released by a space-focused company looking to cash in on the recent boom in speculative interest in that area of the stock market.

What is most remarkable about this, though, is how common this sort of behavior has now become. Nikola might be the most popular example.

But it’s only become more prevalent after Elizabeth Holmes kicked off the trend more than 5 years ago.

And in addition to these product frauds we can add multiple cases of traditional accounting fraud. Wirecard is a prime example.

Luckin Coffee is guilty of perpetuating similar financial shenanigans.

There is even an instance of fraud today at one of the most prominent independent fraud-reporting organizations on Wall Street.

Finally, there is a very real possibility that one of the most popular trades in the markets today is being driven mainly by fraud.

This all begs the question, how much fraud is yet to be uncovered? It took the Dotcom bust to reveal Enron and Worldcom as frauds. It took the Great Financial Crisis to reveal rampant mortgage fraud and the Bernie Madoff fraud. I think we can be certain that these examples noted above are only the tip of the iceberg; we won’t know the full extent until the next major bear market arrives. However, I think it’s already clear that the level of greed stimulated during the current mania is, like many other things right now, unprecedented.