Jim Chanos – five models for fraud

I have followed Jim Chanos since moving to New York.

His recent interview in Hedgeye on fraud is incredible and mirrors many of the little lessons that learnt from the best people I worked with on Wall Street.

Lots to capture in this but Chanos’ Yale course contains 5 models for exploring fraud:

1. Micro-model – triangle of fraud (pressures/opportunities/rationalisation)
2. Macro-model – Kindelberger-Minksy model and the view that fraud mirrors the economic cycle with a lag (particularly for Ponzi schemes)
3. Governance model – Bill Black (of NakedCapitalism fame) –
4. Legal fraud – Bethany Mclean – the forensic analysis of Enron
5. Ethical collapse – Miriam Jennings – Seven Signs of Ethical Collapse

Some of my friends went to Yale SOM but they never talked about Chanos. Not taking his course is the same as me not taking Scott Galloway’s course on marketing although I took Bankruptcy with Max Holmes and Accounting with Prof. Eli Bartov at NYU Stern.