Post by jcline on Jul 21, 2006 14:08:45 GMT -4
Wanted: Investor Advocate – July 19, 2006
Dave Patch
As the adventures of Wall Street corruption looms larger and larger on the stability of the US economy one can only start to wonder who it is that is ultimately looking out for the best interests, or for that matter any interests, of the American people? Who is our Investor Advocate?
To start my search I did not start at the top by looking to the Securities and Exchange Commission, I started lower down the food chain and soon found myself researching the web site of the Securities Industry Association (SIA). Was I ever impressed at what I saw?
Stamped across the home page was the bold statement that the SIA is "the voice of the industry that represents nearly 93 million investors.” Gee this sounds like a good place to start.
But as I delved into the SIA operations I quickly understood that they may be the voice of the industry that represents some 93 million investors but they hardly the voice of the actual 93 million investors. Instead, as one source within the financial media put it, "the SIA is an industry shill.” An industry shill, Is that an investor advocate?
I think I came to the same conclusion long ago when I read about how the state of Utah passed new laws in order to protect the investors and the public companies within their state and SIA spokesman Travis Larson responded by stating that the SIA is considering many options to fight the new law, "including the option of legal recourse.” This after the SIA lobbied to have the bill vetoed but failed.
Clearly reading into the law and the SIA’s position, the SIA is more interested in the brokerage and clearing operations right to sell excessive amounts of shares that do not exist, and hide that trade information from State Regulators upon request, than they are about the damage such sales may have on the investing public. You know, those 93 million people representing more than 50% of all US households.
Ironically one of the goals of the SIA, as published on their website, is to "encourage and support transparency and effective, efficient regulation.” The state of Utah was seeking just that, transparency leading to efficient regulation, and the SIA threatened to sue the state and/or take the brokerage business elsewhere. The SIA was also a critical player in lobbying the SEC over these past years for trade settlements reforms in order to reduce settlements to trade plus 1 day from the existing trade plus 3 guidelines. The SIA understanding the full ramifications of settlement failures in the system and yet the agency also apparently condones abuses in the settlement process when it comes to the financial benefit of the institutions ... that represent the investors.
Several calls into the NY and Washington Offices of the SIA for comment on the SEC's recent admissions that the abuses identified in Utah are in fact harmful to the investing public went unreturned.
Of course if this level of protection fails to meet Investor expectations we should be able to bump it up a notch and go to the Self Regulatory Agencies (SRO's) of Wall Street. They guys must be there to put Investor interests first.
To understand how well protected we are here lets simply consider the news published by the NASD earlier this week.
According to an NASD release, the NASD fined Citigroup, Morgan Stanley (remember that name), and Credit Suisse a total of $775,000 for research analyst conflicts of interest. The conflicts, according to the NASD, transpired between 2002 and 2005. Does anybody notice that these dates are after the $1.4 Billion Global Settlement with Eliot Spitzer, the SEC, and the NASD?
Apparently Citigroup, who was fined over $400 Million in the global settlement, agreed to make a public statement of contrition, and promised to create processes to cease from any future violations went out and committed an additional 3500 disclosure violations between July 2002 and May 2005. I guess the additional $350,000 fine and no sanctions means the SEC's cease and desist from future violations agreement in 2003 is relatively meaningless.
Morgan Stanley and Credit Suisse were also participants of the global settlement and agreed to similar cease and desist orders from the SEC. Yet even before the restitution could be made to investors harmed under the global settlement, even before the ink was dry, these firms were right back at it despite commitments to do otherwise.
For the continued violations these multi-billion conglomerates received yet another slap on the wrist without any personal accountability. The wrist slap by the NASD against these large institutions is a sharper slap in the face to the investing public.
Now had it been me settling this most recent activity, I would have gone after the top executives who signed the global settlement and signed the cease and desist on behalf of the companies they operated and sanctioned them and barred them from the industry. Isn't that what the SRO's are expected to do when executives of non-Wall Street corporations, who sign off on the accounting sheets under Sarbanes Oxley, when fraud is later uncovered?
Okay, so the SRO's are willing to look the other way when it comes to ultimately taking steps to protect the public against the criminals of Wall Street. How about the SEC? Surely they must be the ones looking out for the interests of the investor.
Hold on...remember that firm I told you not to forget - Morgan Stanley was it?
Well recently, stories erupted where the Commission has been accused of a massive cover-up to avoid prosecution involving the CEO of Morgan Stanley. The accusations involved alleged insider trading charges where the CEO is accused of tipping off a friend running a Hedge Fund of a pending merger before the merger was public knowledge and this friend netted an $18 Million profit. The allegations of cover-up go so far as to the SEC firing someone to avoid an investigation into the CEO.
Imagine that, one low level citizen lost his job in order to protect someone alleged to be involved in securities fraud
Now if the tipper to securities fraud were you or I, the SEC would have already prosecuted us. The SEC holds no mercy on those that can't afford the cost of legal fees or that don't have the political clout to make fraud somehow disappear. But for those with the money and the clout come the stall tactics and the ultimate cleansing of the scene. The lost notes, the misplaced documents, the poor executive decisions, and finally the flat out calls to "drop it" all add up to corruption.
While the Morgan Stanley CEO, responsible for the firm who re-violated an SEC cease and desist order, has been afforded the past two years of no action others have already had investigations initiated, concluded, and fines paid.
In fact, the SEC is still negotiating settlement with another respected member of Wall Street, former CEO of Friedman Billings & Ramsey Emanuel Friedman. Friedman is accused of securities fraud associated with a 2001, that's right 5-years ago, private placement deal in which insider trading allegations have been made and Wells notices submitted. But while two low-level fund managers have settled out with the SEC, John Mangan in 2005, and NASD, Hilary Shane in 2004, the respected former executive of Wall Street remains free of any settlement and any enforcement. Friedman is free to keep the ill-gotten gains and is allowed to use those gains to continue to generate additional profits while the SEC delays the inevitable.
Ironically, the NASD barred Hilary Shane from the Industry while the SEC only fined Mangan who apparently has some indirect connections with yet another respected and influential member of Wall Street. In the investigation Mangan implicated his partner, Hugh McColl III in the insider trading activities but McColl was never ironically charged. It was McColl’s private firm that executed the illegal trades however. Hugh McColl III just happens to be the son of former Bank of New York CEO Hugh McColl Jr.
For the record, I did put a call into the SEC to ask for any comments on the most recent NASD allegations of research fraud and that dynamo spokesman for the SEC, John Heine, provided yet another "no comment.” If only I had a nickel for each time I heard that, I would not even have to worry about the losses in the market due to fraud.
Now you know, I couldn't make this stuff up if I tried.
Okay, so we have dismissed the SIA from being responsible for protecting the investor, we have implied that when a crossroad appears the NASD puts Wall Street Institutions above the interests of the investor, and now we have the SEC implicated in doing the same. Is there nobody out there that is really interested in putting "mom and pop's" interests above the financial interests of the Wall Street corporations and the highly compensated executives who run these criminal operations?
Oh yea, I call them criminal operations because that is what they are.
Think of it this way. In the US we do not have 5 major crime families we have 6. In my book Wall Street is the biggest crime family of them all as they have gained our trust and yet stolen us blind. When Al Capone ruled the streets of Chicago he forced the storeowners to pay him protection money or he would destroy their business. Today, for this crime wave we pay Wall Street protection money, acceptable fraud, to insure our families are not financially destroyed. Those we pay to look out for our best interests are repeatedly abusing us and the regulators have simply considered this part of the protection costs.
Sounds like a crime family operation to me.
I have plenty more of these tidbits of such circumstantial anomalies but they will have to wait other time. For now best of luck to all you Joe-Six packs there. The guys drinking the Dom Perignon and eating the caviar are coming after your beer money because the price of lobster just went up and the gas prices are increasing their yacht and private jet expenses. All sealed with the approval of Wall Street finest police.
Special Note: To those members of the other 5 major Crime families referenced, I apologize for lumping you in with these Wall Street characters. Unfortunately you were simply the worst I could think of under such short notice.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006
Dave Patch
As the adventures of Wall Street corruption looms larger and larger on the stability of the US economy one can only start to wonder who it is that is ultimately looking out for the best interests, or for that matter any interests, of the American people? Who is our Investor Advocate?
To start my search I did not start at the top by looking to the Securities and Exchange Commission, I started lower down the food chain and soon found myself researching the web site of the Securities Industry Association (SIA). Was I ever impressed at what I saw?
Stamped across the home page was the bold statement that the SIA is "the voice of the industry that represents nearly 93 million investors.” Gee this sounds like a good place to start.
But as I delved into the SIA operations I quickly understood that they may be the voice of the industry that represents some 93 million investors but they hardly the voice of the actual 93 million investors. Instead, as one source within the financial media put it, "the SIA is an industry shill.” An industry shill, Is that an investor advocate?
I think I came to the same conclusion long ago when I read about how the state of Utah passed new laws in order to protect the investors and the public companies within their state and SIA spokesman Travis Larson responded by stating that the SIA is considering many options to fight the new law, "including the option of legal recourse.” This after the SIA lobbied to have the bill vetoed but failed.
Clearly reading into the law and the SIA’s position, the SIA is more interested in the brokerage and clearing operations right to sell excessive amounts of shares that do not exist, and hide that trade information from State Regulators upon request, than they are about the damage such sales may have on the investing public. You know, those 93 million people representing more than 50% of all US households.
Ironically one of the goals of the SIA, as published on their website, is to "encourage and support transparency and effective, efficient regulation.” The state of Utah was seeking just that, transparency leading to efficient regulation, and the SIA threatened to sue the state and/or take the brokerage business elsewhere. The SIA was also a critical player in lobbying the SEC over these past years for trade settlements reforms in order to reduce settlements to trade plus 1 day from the existing trade plus 3 guidelines. The SIA understanding the full ramifications of settlement failures in the system and yet the agency also apparently condones abuses in the settlement process when it comes to the financial benefit of the institutions ... that represent the investors.
Several calls into the NY and Washington Offices of the SIA for comment on the SEC's recent admissions that the abuses identified in Utah are in fact harmful to the investing public went unreturned.
Of course if this level of protection fails to meet Investor expectations we should be able to bump it up a notch and go to the Self Regulatory Agencies (SRO's) of Wall Street. They guys must be there to put Investor interests first.
To understand how well protected we are here lets simply consider the news published by the NASD earlier this week.
According to an NASD release, the NASD fined Citigroup, Morgan Stanley (remember that name), and Credit Suisse a total of $775,000 for research analyst conflicts of interest. The conflicts, according to the NASD, transpired between 2002 and 2005. Does anybody notice that these dates are after the $1.4 Billion Global Settlement with Eliot Spitzer, the SEC, and the NASD?
Apparently Citigroup, who was fined over $400 Million in the global settlement, agreed to make a public statement of contrition, and promised to create processes to cease from any future violations went out and committed an additional 3500 disclosure violations between July 2002 and May 2005. I guess the additional $350,000 fine and no sanctions means the SEC's cease and desist from future violations agreement in 2003 is relatively meaningless.
Morgan Stanley and Credit Suisse were also participants of the global settlement and agreed to similar cease and desist orders from the SEC. Yet even before the restitution could be made to investors harmed under the global settlement, even before the ink was dry, these firms were right back at it despite commitments to do otherwise.
For the continued violations these multi-billion conglomerates received yet another slap on the wrist without any personal accountability. The wrist slap by the NASD against these large institutions is a sharper slap in the face to the investing public.
Now had it been me settling this most recent activity, I would have gone after the top executives who signed the global settlement and signed the cease and desist on behalf of the companies they operated and sanctioned them and barred them from the industry. Isn't that what the SRO's are expected to do when executives of non-Wall Street corporations, who sign off on the accounting sheets under Sarbanes Oxley, when fraud is later uncovered?
Okay, so the SRO's are willing to look the other way when it comes to ultimately taking steps to protect the public against the criminals of Wall Street. How about the SEC? Surely they must be the ones looking out for the interests of the investor.
Hold on...remember that firm I told you not to forget - Morgan Stanley was it?
Well recently, stories erupted where the Commission has been accused of a massive cover-up to avoid prosecution involving the CEO of Morgan Stanley. The accusations involved alleged insider trading charges where the CEO is accused of tipping off a friend running a Hedge Fund of a pending merger before the merger was public knowledge and this friend netted an $18 Million profit. The allegations of cover-up go so far as to the SEC firing someone to avoid an investigation into the CEO.
Imagine that, one low level citizen lost his job in order to protect someone alleged to be involved in securities fraud
Now if the tipper to securities fraud were you or I, the SEC would have already prosecuted us. The SEC holds no mercy on those that can't afford the cost of legal fees or that don't have the political clout to make fraud somehow disappear. But for those with the money and the clout come the stall tactics and the ultimate cleansing of the scene. The lost notes, the misplaced documents, the poor executive decisions, and finally the flat out calls to "drop it" all add up to corruption.
While the Morgan Stanley CEO, responsible for the firm who re-violated an SEC cease and desist order, has been afforded the past two years of no action others have already had investigations initiated, concluded, and fines paid.
In fact, the SEC is still negotiating settlement with another respected member of Wall Street, former CEO of Friedman Billings & Ramsey Emanuel Friedman. Friedman is accused of securities fraud associated with a 2001, that's right 5-years ago, private placement deal in which insider trading allegations have been made and Wells notices submitted. But while two low-level fund managers have settled out with the SEC, John Mangan in 2005, and NASD, Hilary Shane in 2004, the respected former executive of Wall Street remains free of any settlement and any enforcement. Friedman is free to keep the ill-gotten gains and is allowed to use those gains to continue to generate additional profits while the SEC delays the inevitable.
Ironically, the NASD barred Hilary Shane from the Industry while the SEC only fined Mangan who apparently has some indirect connections with yet another respected and influential member of Wall Street. In the investigation Mangan implicated his partner, Hugh McColl III in the insider trading activities but McColl was never ironically charged. It was McColl’s private firm that executed the illegal trades however. Hugh McColl III just happens to be the son of former Bank of New York CEO Hugh McColl Jr.
For the record, I did put a call into the SEC to ask for any comments on the most recent NASD allegations of research fraud and that dynamo spokesman for the SEC, John Heine, provided yet another "no comment.” If only I had a nickel for each time I heard that, I would not even have to worry about the losses in the market due to fraud.
Now you know, I couldn't make this stuff up if I tried.
Okay, so we have dismissed the SIA from being responsible for protecting the investor, we have implied that when a crossroad appears the NASD puts Wall Street Institutions above the interests of the investor, and now we have the SEC implicated in doing the same. Is there nobody out there that is really interested in putting "mom and pop's" interests above the financial interests of the Wall Street corporations and the highly compensated executives who run these criminal operations?
Oh yea, I call them criminal operations because that is what they are.
Think of it this way. In the US we do not have 5 major crime families we have 6. In my book Wall Street is the biggest crime family of them all as they have gained our trust and yet stolen us blind. When Al Capone ruled the streets of Chicago he forced the storeowners to pay him protection money or he would destroy their business. Today, for this crime wave we pay Wall Street protection money, acceptable fraud, to insure our families are not financially destroyed. Those we pay to look out for our best interests are repeatedly abusing us and the regulators have simply considered this part of the protection costs.
Sounds like a crime family operation to me.
I have plenty more of these tidbits of such circumstantial anomalies but they will have to wait other time. For now best of luck to all you Joe-Six packs there. The guys drinking the Dom Perignon and eating the caviar are coming after your beer money because the price of lobster just went up and the gas prices are increasing their yacht and private jet expenses. All sealed with the approval of Wall Street finest police.
Special Note: To those members of the other 5 major Crime families referenced, I apologize for lumping you in with these Wall Street characters. Unfortunately you were simply the worst I could think of under such short notice.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006