Every one of these began as a business with good numbers. Learning how a fraud is structured is the fastest route to a sceptical eye on a set of accounts, which is what a research, credit or audit interview is really testing.
Enron: The Smartest Guys in the Room
2005EssentialDocumentaryStart hereAn evening
What to notice. Revenue recognition and off-balance-sheet vehicles can book profit that never arrives.
Mark-to-market accounting and off-balance-sheet vehicles, explained through the company that used both to book profit that never arrived. The reference point for any accounting-quality question you get asked.
Where it shows up in a roomWhere it shows up in a room
Any question about earnings quality or why cash flow matters more than profit has its best example here.
Madoff: The Monster of Wall Street
2023RecommendedSeriesStart hereA few evenings
What to notice. Returns too smooth to be real are themselves the evidence.
Four episodes on the largest Ponzi scheme in history, and more usefully on the decade of people who spotted it and were ignored. Watch how the smoothness of the returns was itself the tell.
Where it shows up in a roomWhere it shows up in a room
It gives you a real answer to what you would look at first in a fund’s track record, which is a common buy-side screen.
The China Hustle
2017RecommendedDocumentaryIntermediateAn evening
What to notice. A short seller does fieldwork because the filings are the thing in doubt.
Reverse mergers, auditor incentives and how a listed company can have almost no business behind it. The best primer available on why a short seller does fieldwork instead of reading filings.
Where it shows up in a roomWhere it shows up in a room
Asked how you would research a short, this is where the answer stops being a screen and starts being primary evidence.
Betting on Zero
2016RecommendedDocumentaryIntermediateAn evening
What to notice. A crowded short can be defended by anyone with more capital than you.
One activist short thesis on a multi-level marketing company, followed through to the squeeze. A rare look at what happens when a crowded short is publicly defended by someone with more capital.
Where it shows up in a roomWhere it shows up in a room
It is the clearest case for why being right about a business is not the same as making money on it.
Rogue Trader
1999RecommendedFilmStart hereAn evening
What to notice. One person holding both the trade and its settlement is the whole failure.
A single trader, an error account and a bank that could not reconcile its own positions. It is the origin story for most of the segregation-of-duties controls you will be trained on in your first week.
Where it shows up in a roomWhere it shows up in a room
Operations and risk interviews ask what controls are for. This answers it with a bank that no longer exists.
The Inventor: Out for Blood in Silicon Valley
2019RecommendedDocumentaryStart hereAn evening
What to notice. A board that accepts a narrative has stopped doing diligence.
A diligence failure rather than a markets one. Useful for venture and growth interviews because it shows what happens when a board accepts a founder narrative in place of evidence.
Where it shows up in a roomWhere it shows up in a room
Asked what you would diligence first in an early-stage company, the honest answer is the thing nobody has independently verified.
Dirty Money
2018For the curiousSeriesStart hereA few evenings
What to notice. Most corporate fraud is an incentive structure working exactly as designed.
An anthology where each episode is a self-contained corporate fraud, from emissions testing to payday lending. Good for breadth when you want a case nobody else in the room will raise.