The Patek Philippe IOS is a watch that came from a collapsing empire.
Investors Overseas Services Ltd, or IOS, came into being in 1955, founded by salesman and financier Bernard Cornfield. He began selling mutual funds, as a change was taking place in the American stock market – traditional investment companies were falling to the wayside, replaced by new open-end mutual funds where money received went into a variety of stocks and shares. A persuasive salesman like Cornfeld could easily point out to investors the advantage of diversity on a rising market, and by the late 60’s IOS was managing about 2.5 billion dollars of other people’s money.
It was Cornfield’s aim to make IOS the most important financial force in the world. It skimmed 20% off the money that was invested, and paid 8.5% to its salesmen. Of course, being a salesman at heart, Cornfield had little patience for the inconveniences of government regulation. When scrutiny from the law came, he moved the company’s operations to Geneva, and thus by operating internationally was able to deftly sidestep any problems with legality.
IOS invested in banks, in property, in companies. They purchased a huge stake in Patek Philippe, which is where the watch comes in. As IOS was in effect a kind of pyramid scheme, incentivising salesmen to push for growth was a priority. The IOS Million Dollars Association was created – any IOS trader that surpassed a turnover threshold of 1 million dollars would receive one of these watches as a kind of badge of honour. The production number has never officially been disclosed, but it’s thought to be around 1,500.
The watch was very much a product of the company that commissioned it – gold case, gold dial, gold rotor stamped and signed by Patek Philippe, gold case with Million Dollar Associate engraved on the back. It was wealth, sitting on your wrist in shiny yellow metal.
This attitude of striving for growth – Cornfield’s personal motto was said to be ‘Whatever it looks like, it’s all money’ – led to poor investments and somewhat fictionalised versions of financial reports. Eventually it came to light that the company’s profits, after the cuts taken by managers, salesmen, and the international overheads, were virtually non-existent.
Things came to a head in 1970, when shares were plummeting in value. Financier Robert Vesco who, at the time, was also in financial trouble, offered his help to Cornfield and IOS – and then proceeded to use 500 million dollars of IOS money to cover his own debts, fleeing to the Bahamas when this was discovered. IOS collapsed, ruining a number of US and European banks, and acting as a major cause in the financial crash of 1970. Cornfield was arrested for fraud, and spent 11 months in a Swiss prison before charges against him were dropped.
The only part of IOS to escape, and retain any semblance of value, are the Million Dollar Association Patek Philippe watches. Patek Philippe are still known for the quality of their timepieces, and this name alone is enough to guarantee the value of a watch. But the IOS ones in particular stand as testament to how a wristwatch can often withstand the kind of crashes that ruin whole companies, without losing any value whatsoever.
The IOS Patek watches got away without so much as a scratch, as a whole financial empire crumbled around them. They’re that rare kind of watch where their value is immediately apparent, even at a glance, even to someone with no knowledge of watches, even without knowing their history. But that value is even more impressive when you take into account their unscrupulous origins, and the collapse they’ve withstood.