Editing Investors Overseas Services (section)

==Collapse and Vesco Takeover==
(1970–1973)Financial Crisis: In 1970, a global stock market slump eroded IOS’s asset values, triggering investor withdrawals. The SEC, investigating since 1967, banned IOS from U.S. operations, citing unregistered securities sales. European regulators, including Germany and Switzerland, tightened oversight, freezing IOS accounts. By April 1970, IOS faced a liquidity crisis, unable to meet redemption demands.

Vesco’s Takeover: Robert Vesco, a New Jersey financier with a conglomerate (International Controls Corporation), saw IOS’s distress as an opportunity. In 1970, he acquired control for less than $5 million, ousting Cornfeld in a hostile takeover. Cornfeld was jailed in Geneva for 11 months on fraud charges but acquitted in 1975. Vesco looted $224 million from IOS funds, transferring assets through shell companies in the Bahamas, Costa Rica, and Luxembourg, per SEC allegations cited in The New York Times (1973).

Downfall: Vesco’s mismanagement and theft collapsed IOS by 1973, with investors losing an estimated $500 million. The SEC filed charges in November 1972, accusing Vesco, Cowett, and others of fraud. Vesco fled to Costa Rica, becoming a fugitive, while IOS entered receivership. The scandal, detailed in The Great American Confidence Game by Arthur Herzog, tarnished offshore finance and prompted global regulatory reforms.