South Sea Bubble
One of the largest stock scams of all time. The U.K.-based South Sea Company's shares saw a huge appreciation based on rumor, speculation and false claims before plummeting and eventually becoming worthless. Thousands of people lost their life savings.
Investopedia Commentary
The scam occurred in 1711, when South Sea's stock soared in the wake of speculation and greed surrounding the monopoly the South Sea Company was perceived to have in the shipping and trade industries, particularly in South American colonies such as Spain and Mexico.
With nothing to prevent it from doing otherwise, South Sea Company's management continued to issue shares in response to seemingly insatiable demand. As a result, the stock's price soared, defying all fundamental sense. Eventually, the truth was exposed: the company was making virtually no profit, and the share price plummeted when investors fled.
In the post-Enron investing world, the scam has been dubbed the "Enron of England" by some.
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See also: Bankruptcy, Bubble, Chapter 11, Contraction, Cook The Books, Cookie Jar Accounting, Depression, Enron, Global Crossing, Voodoo Accounting
Also spelled: S. See Bubble, S. Sea Bubble, S.S Buble, South Sea Buble, South Bubble, Sea Bubble