The crisis of the IOS

1969 were the IOS on the high point of their success. It controlled about 2.5 billion $ of plant funds and was thereby one of the largest fund management companies of the world. The number of the investors became world-wide estimated on over one million and Berne pool of broadcasting corporations Cornfeld was several times main speaker on the Institutional of investor Conference, an exclusive meeting for institutional investors in New York.

At the end of of 1968 had the IOS with large success a part of the shares of its subsidiary IOS management Ltd. to the stock exchange brought (the society, the large funds of the IOS like the IIT and the find OF of find administered those). Therefore 1969 also parent company stocks IOS Ltd. should. at the stock exchange to be placed. This plan was evaluated positively by many IOS coworkers, because afterwards they had to make in the future the possibility at any time their IOS shares at the stock exchange, acquired by the stick option plan, money. After the plan the coworkers could redeem stick option after 10 years the first 10% of their share options, in each subsequent year then further 10%. Among the time of the stock exchange course the IOS ranked about 2,200 internal shareholders, 1961 it only 34 had been. In October 1969 11 million shares for 10 $ per share were offered for the public purchase. From it 50% originated from the existence of the old shareholders and 50% from a capital increase. Cornfeld had after the stock exchange course only 16% of the shares of the IOS. To the society, whose registered place of business had been shifted briefly before from Panama into the Canadian province Ontario, flowed from the stock exchange course over 50 million $. The share quotation developed first well, it oscillated up to the beginning of the IOS crisis in March 1970 between 13 and 17 $. Since the IOS guidance had encouraged it in addition, many coworkers from the lower and middle enterprise levels acquired many shares, often with borrowed money, in the first months which many in the following sharp fall in prices of the IOS share should become the calamity.

The IOS was caught up in the phase of apparent perfect success by different erroneous trends. Berne pool of broadcasting corporations Cornfeld had withdrawn itself since 1968 nearly completely from the guidance of the society. Most time spent he with its lives filling the newspapers as a jet Setter with beautiful women, expensive hobbies (mode firm/film projects) and own locks. The fate of the company was led starting from in the middle of 1968 actually by Edward Cowett. Cowett was considerably responsible for the fact that substantial means find of the OF of find (altogether 217 millions $) for projects of the raw material exploration company King Resources of John M. King were used. The IOS with the Canadian Channing group continued to acquire a unprofitable fund company and lost several millions $ by investments into the mixing company Commonwealth United. The moreover one the rapidly growing sales organization devoured a ever larger part of the taken funds. In addition the missing internal cost management came, then apart from the selling also the administrative machinery was continued to blow up. Assigned to large extent credits to prominent coworkers, besichert only with the shares of the IOS. It continued to turn out that Edward Cowett had used nearly 25 millions $ of the IOS to support after the stock exchange course the course of the IOS share.

By these erroneous trends the IOS was despite the means from the stock exchange course and high profits from the current business at the end of of 1969 in a liquidity crisis. At the beginning of March 1970 informed the IOS finance executive committee Melvin Lechner the guidance of the IOS that instead of the expected profit of 0,50 $ per share only 0.21 $ per share can be proven (and also this profit was by a doubtful book profit by the higher valuation of oil drilling rights in the arctic from a joint undertaking with John M. King). The IOS worked already in the second half of the yearly 1969 with loss, for which current financial year had to confirm 1970 the IOS further losses. After the financial situation of the enterprise admits publicly had become, the IOS share came starting from at the beginning of April strongly under pressure and fell to June 1970 on occasional under 2 $, many investors and employees with credit-financed commitments lost by the enforced sale of its shares much money, when the value of the shares no more was not sufficient to the safety device of the credits. Cornfeld, which had lost control of the society by the stock exchange course of the IOS, could not hold its positions in the guidance of the company despite intensive efforts. At the beginning of of May 1970 it was entmachtet in a meeting of the board of directors and was not selected on 30 June 1970 in the general meeting again into the board of directors. Also Edward Cowett had to leave the company. All CAN gate in June 1970 as a selling boss by Harvey Felberbaum one replaced, which had developed the IOS organization in Italy. Erich Mende left the IOS at the beginning of of July 1970.

The new guidance of the IOS under Sir Eric Wyndham White strove immediately for the entrance of financially strong investors. In this situation it was a disadvantage that the IOS had never striven for particularly good relations with the traditional banks. There was not large interest in a society come into the crisis, which the representatives in crowds ran away and whom from high central return flows suffered. The number of the employees was reduced to at the end of of 1970 to half, the number of the representatives likewise, the administered means sank by Kursverluste and portion returns to 1,4 billion $. The IOS registered a loss of 25 millions in the first half-year 1970 $.Schliesslich came it to an offer of 1 $ per share by the bank Rothschild into Paris, which was rejected however by the board of directors of the IOS as too low, since the business partner of many years of the IOS, John M. King had ordered, 4 $ per share. John M. King could not keep its financial promises, so that the IOS finally accepted the support offer of a new prospective customer, Robert Vesco, principal shareholder and chairman of the mixing company developed by him internationally control corporation (IIC). On 3 September 1970 the IOS closed a credit agreement with Vescos company.

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