Financial Sense Newshour with Jim Puplava

Frank Partnoy

Author, Professor of Law, University of San Diego

Infectious Greed: How Deceit and Risk Corrupted the Financial Markets

May 10, 2003

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Infectious Greed: How Deceit and Risk Corrupted the Financial Markets In 1984, Andy Krieger, a young Wharton grad and former Sanskrit scholar, began his career at Salomon Brothers trading currency options. It was an obscure and complicated new business, yet in a firm that included such legends as John Meriwether and Paul Mozer, Krieger invented a new way to make money. Hedging risky bets on the movement of currencies, he made $30 million in his first year, and ten times that a few years later. But as his trades became frighteningly large and complex, Krieger unwittingly became patient zero in the plague of corruption that now threatens American business to its very foundations.

In a compelling and disturbing narrative, Frank Partnoy brings to bear all of his skills and experience as a criminal defense attorney, financial analyst, law professor, and best-selling author to tell the story of the rise of the trading instruments and corporate financial structures that now imperil the economic health of the country. Starting in the mid-1980s with the introduction of the first currency options and proto-derivatives, and taking us through such high-profile disasters as Barings Bank and Long-Term Capital Management, Partnoy traces a seamless progression to the dangerous manipulations that are coming to light today. He documents how each new level of financial risk, loss of control, and complexity obscured the sickness of the companies in question and pushed individuals to ever more ingenious deceptions.

Frank Partnoy is currently a professor at the University of San Diego School of Law. He has worked as an investment banker, derivatives broker, and criminal defense and securities attorney. He also consults on regulation of the markets and white-collar crime, and has provided expert testimony before the Senate committee investigating the Enron collapse. Partnoy is the author of F.I.A.S.C.O.: Blood in the Water on Wall Street. He lives in San Diego, California.