Equity Funding

Equity Funding

Equity Funding Corporation of America was a Los Angeles-based U.S. financial conglomerate that marketed a package of mutual funds and life insurance to private individuals in the 1960s and 70s. It collapsed in scandal in 1973 after ex-employee Ronald Secrist and securities analyst Ray Dirks blew the whistle on massive accounting fraud, including a computer system dedicated exclusively to creating and maintaining fictitious insurance policies. Investigation found that from 1964 onward, as many as 100 company employees had engaged in organized deception of investors, auditors, reinsurers and regulatory authorities.

An important sidelight was the filing of insider trading charges against whistleblower Dirks. The ensuing case of "Raymond L. Dirks v. Securities and Exchange Commission" went all the way to the U.S. Supreme Court where Dirks was finally acquitted. The case has been termed historic in helping to define insider trading, as well as the treatment of whistleblowers, analysts and the press.

ee also

*History of information technology auditing

References

* [http://www.stocksandnews.com/searchresults.asp?Id=1573&adate=2/6/2004 Ray Dirks and the Equity Funding Scandal, Part I] and [http://www.stocksandnews.com/searchresults.asp?Id=1579&adate=2/13/2004 Part II] at stockandnews.com
* [http://www.thestreet.com/stocks/accounting/789337.html Cracking the Books II: Reliving Equity Funding] at thestreet.com

External links

*imdb title|id=0074206|title=Billion Dollar Bubble — the Equity Funding scandal retold in the form of a movie starring James Woods in the role of the actuary


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