Chapter 17: Further Reading — Financial Misinformation and Market Manipulation

Books

1. Bethany McLean and Peter Elkind, "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron" (Portfolio, 2003) The definitive journalistic account of Enron's collapse, written by the Fortune reporter who first raised public doubts about the company in a 2001 article asking "Is Enron Overpriced?" McLean and Elkind provide detailed accounts of the accounting mechanisms, the executive culture, and the media and analyst ecosystem that failed to scrutinize Enron's claims. Essential reading for understanding corporate financial misinformation and the role of business journalism in enabling or preventing fraud. The book is notably candid about financial media's collective failure to ask hard questions during Enron's rise.

2. Harry Markopolos, "No One Would Listen: A True Financial Thriller" (Wiley, 2010) Markopolos's first-person account of his eight-year attempt to convince the SEC that Bernie Madoff was running the world's largest Ponzi scheme. Provides essential reading on the organizational failures that allowed Madoff's fraud to persist, the specific analytical methods Markopolos used to identify the fraud, and the experience of being a whistleblower in an unresponsive regulatory system. The book is both a gripping narrative and a detailed forensic analysis of Madoff's scheme.

3. Michael Lewis, "Flash Boys: A Wall Street Revolt" (Norton, 2014) An examination of high-frequency trading and the information asymmetries created by speed advantages in modern financial markets. Though not primarily about fraud, the book provides essential context for understanding how market microstructure creates systematic information advantages for some participants over others. Lewis's accessible writing style makes complex material approachable; his analysis of payment for order flow is directly relevant to the Robinhood/GameStop episode.

4. Anne Goldgar, "Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age" (University of Chicago Press, 2007) The definitive scholarly revisionist history of Dutch tulip mania, based on extensive archival research. Goldgar demonstrates that the popular account — of irrational speculation and mass ruin — is substantially false and was largely constructed from satirical pamphlets rather than contemporaneous financial records. Essential reading both for the historical subject and as a methodological model for using primary sources to evaluate financial narratives.

5. Zeke Faux, "Number Go Up: Inside Crypto's Wild Rise and Staggering Fall" (Currency, 2023) A journalist's account of the cryptocurrency industry from 2021-2022, including extensive reporting on Tether, FTX, and the broader ecosystem of fraud and excess that characterized the crypto boom. Faux embedded with industry participants and provides vivid first-person reporting on the culture and mechanisms of crypto misinformation. The FTX chapters are among the best journalistic accounts of SBF and the exchange's collapse.

6. Michael Perino, "The Hellhound of Wall Street: How Ferdinand Pecora's Investigation of the Great Crash Forever Changed American Finance" (Penguin Press, 2010) An account of the Pecora Commission (1932-1934) — the Senate hearings that investigated the causes of the 1929 crash and the frauds of the preceding boom. The hearings revealed systematic misinformation practices by major banks, resulting in the Glass-Steagall Act and the Securities Acts of 1933 and 1934. Essential context for understanding the historical relationship between financial fraud, public investigation, and regulatory reform.

Academic Articles and Research

7. Barber, Brad M., Terrance Odean, Lin Peng, and Chaojun Wang, "Attention-Induced Trading and Returns: Evidence from Robinhood Users" (Review of Financial Studies, 2022) A rigorous academic analysis of retail trading patterns on Robinhood, finding that attention-driven trading — investors buying stocks that appear in news or social media — leads to systematically negative returns. The paper provides empirical grounding for the argument that retail investors attracted to high-attention stocks (like GME during the squeeze) tend to buy at elevated prices and suffer losses. Essential empirical context for evaluating the GameStop democratization narrative.

8. Rantala, Ville, "How Do Investment Ideas Spread through Social Interaction? Evidence from a Ponzi Scheme" (Journal of Finance, 2019) An empirical study using unique data from a Finnish Ponzi scheme to trace how investment fraud spreads through social networks. The paper documents that Ponzi scheme recruitment follows strong social network patterns — victims recruit other victims through existing trust relationships — and that network centrality correlates with both recruitment success and loss severity. Provides rigorous quantitative grounding for social network mechanisms in financial fraud.

9. Rennekamp, Kristina M., "Processing Fluency and Investors' Reactions to Disclosure Readability" (Journal of Accounting Research, 2012) Research showing that investors respond more favorably to financial disclosures written in accessible, easy-to-read language — regardless of the actual content of the disclosure. This processing fluency effect has direct implications for understanding how financial PR can exploit cognitive tendencies to create favorable impressions. Accessible technical article with clear implications for critical evaluation of financial communications.

10. Comerton-Forde, Carole, and Talis Putnins, "Stock Price Manipulation: Prevalence and Determinants" (Review of Finance, 2015) A systematic empirical study of stock price manipulation patterns across multiple markets, identifying the characteristics of securities and market conditions that make manipulation more or less likely. Provides rigorous evidence on the prevalence of pump-and-dump and other manipulation schemes. Useful for understanding detection probability and the market conditions that enable fraud.

Official Reports and Regulatory Documents

11. U.S. Securities and Exchange Commission, "Staff Report on Equity and Options Market Structure Conditions in Early 2021" (October 2021) The SEC's official analysis of the GameStop episode, including detailed examination of the price dynamics, trading patterns, the role of social media, and the Robinhood trading halt. The report corrects several widely circulated narratives about the event (particularly the gamma squeeze hypothesis) and provides official data on trading patterns during the squeeze. Available free at sec.gov. Essential primary source for the GameStop case study.

12. Powers, William C., Raymond S. Troubh, and Herbert S. Winokur Jr., "Report of Investigation by the Special Investigative Committee of the Board of Directors of Enron Corp." (February 2002) The "Powers Report" — the internal investigation commissioned by Enron's board after the collapse. Provides detailed technical analysis of the SPE structures, the accounting treatments, and the decisions made by management and auditors. While an internal document with obvious limitations (the investigators were Enron board members), it provides authoritative technical detail on the fraud mechanisms. Available through various legal and academic archives.

13. U.S. Bankruptcy Court, Southern District of New York, "First Interim Report of John J. Ray III to the Independent Directors" (FTX, November 2022) Ray's initial bankruptcy filing, including his declaration that FTX represented "a complete failure of corporate controls" unlike anything he had seen in his career. The filing provides contemporaneous primary source documentation of FTX's organizational chaos and financial opacity. Available through PACER (Public Access to Court Electronic Records) and through numerous news archives. Essential primary source for the FTX case study.

Online Resources

14. SEC's Investor Education Website (investor.gov) The SEC maintains an extensive investor education resource covering fraud recognition, investment research tools, and regulatory information. Particularly useful are the "Fraud Tips" section (red flags for common investment frauds), the investment adviser search tool, and the guide to reading SEC filings. Free and regularly updated. An essential first-stop resource for practical fraud detection skills.

15. FINRA's BrokerCheck (brokercheck.finra.org) The Financial Industry Regulatory Authority's database for researching the background and regulatory history of brokers and brokerage firms. Provides information on disciplinary actions, customer complaints, and employment history. Similar to the SEC's IAPD for investment advisers, but covering broker-dealers and their registered representatives. Free public access.