ABSTRACT
The United States has a long history of financial scandals, rich in intriguingly complex individuals, angry and righteous reformers, a fickle media, indignant investors, and a dash of sex and violence. Capitalism represents an ongoing tension between profit maximization and the good of the community, sometimes not the same thing. The financial fraud at Refco Inc. in the US is a recent example of the limited ability of enhanced regulation and financial controls to eliminate corporate wrongdoing". Management in the business sector was not focused on productivity and profits, but on survival, by cleaning up balance sheets and making certain that accounting practices were more conservative and transparent. The words "wealth destruction" meant the loss of billions of dollars of retirement money and squeezed the economy. Certainly areas where problems could occur include derivatives and hedge funds, two areas where financial innovation has run well ahead of the regulatory regime.
