Anyone here ever have a paranoia of going to prison for being wrong about some aspects of the financial markets during their Career lifetime? And then being charged with a financial crime?
Working in finance sometimes require you to create financial models to predict the financial future.
Anyone here ever fear that the numbers in your financial models will be very wrong one day and then the investors/clients will lose money because they relied on your models and then you will be charged with a financial crime like securities fraud because the financial models you created were very wrong? Like during the surprise 2008 depression?
Can a hedge fund manager (over a 30-year career) be successful during 29 of those years and then all of a sudden, there was 1 year where his financial models to his clients/investors did not go as projected and then the hedge fund manager will be charged with some financial crimes like securities fraud? (And get 20+ years in prison for losing millions of dollars in investors money based off his failed financial models for that year.)
How bad are your models?
You are definitely going to prison.
Not sure anyone really went to prison in 08 for being wrong about their bets. Lost their jobs but unless you are actively deceiving then you’re fine.
Theres a reason we include the disclosures in every single book and source and tie to everything.
All that being said tho, if you’re really worried about that, how bad are your models lol
Models are projections, aren't they all wrong and never right in the future? There's disclaimers that say there is risk and these numbers aren't the numbers you would see in an investment no? And maybe I'm misinformed but isn't a 50% investment success really good and reality is 1/3 investments will succeed if you're a top investor.
Being unsuccessful in your financial models and committing a crime are two different things. You break the law when you trade material nonpublic information.
Unless you’re a member of Congress. Then you can trade whatever the fuck you want.
Or send a WhatsApp…
To get prosecuted criminally for securities fraud, an intent to deceive for profit would be required. Prosecutors don't care if you fucked up a model by mistake.
You don't seem to have a very good understanding of what constitutes securities fraud. An analyst getting the numbers wrong in a DCF model isn't going to prison.
And someone who has a good year 29 years running and then goes to jail after a bad 30th year is far more likely to have been committing fraud for some portion of those 29 years, and then having it all found out in the down year. That is basically the Bernie Madoff story.
That's not how any of this works... if people went to jail over a model being wrong and outcome not going as expected, everyone would go to prison at some point.
Yeah I think this question is so odd. You don't go to prison for poor performance. Everyone in every job has poor performance at times.
I feel too old for this forum when I read messages like this. OP is probably like 15yo.
Watches Wolf of Wallstreet once
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