Post by jcline on Dec 20, 2006 14:00:35 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
Wall Street Excess - December 19, 2006
David Patch
It is the Holiday season and one thing is for sure, Wall Street has no grinch in it's midst.
Last week it was reported that Morgan Stanley CEO John Mack would be the recipient of a $40 Million bonus package for his 2006 work performance. Yes, $40 Million BONUS. But Mack would not stand alone in receiving such a mind-boggling bonus. Goldman Sachs CEO Lloyd Blankfein will reportedly take in an every more grotesque $57 Million in bonuses after stepping into the CEO role midway thru the year; June 2006. Not bad for a part time CEO.
Now I am all for capitalism and every individuals right to get the highest compensation that can be achieved but such rights also come with a level of accountability and responsibility. Such expectations are indisputable if such an individual is at the executive level of a publicly traded company where their personal decisions can impact tens of thousands of people or more.
So with $40 Million and $53 Million in bonus packages, have these CEO's lived up to the expectations of integrity and accountability deserving of such grossly inflated pay packages?
Consider that within a week of the announcement that John Mack will receive his $40 Million, the NASD has filed charges against the company for the destruction of critical evidence necessary for investors in bringing arbitration cases against the firm. By law, investors cannot sue their brokers in court for claims of abuse but must take their case to arbitration panels employed by the market regulators. Under arbitration, the evidence necessary in making a case must be provided in many cases by the brokerage firm itself, which is why the law requires each firm to maintain accurate records of all communications between broker and client including e-mail retention.
According to the NASD case filed, Morgan Stanley had destroyed or hid the e-mails necessary in hundreds arbitration cases making it difficult for the investor to make their case against Morgan Stanley. In fact, Morgan Stanley lied to regulators when questioned about the retention of these e-mails claiming the 9/11 tragedy was the cause of the lost e-mails when in fact this was not at all the case.
The result of such abuse was that investors seeking arbitration against Morgan were cheated out of their rightful settlement because Morgan Stanley hid the damaging evidence against them. Instead of settling the dispute and respecting the rights of the abused, Morgan CEO John Mack has decided to fight the regulators. What's worse, this is not the first time Morgan Stanley has seen a regulatory action against them for such abuse. Morgan was fined years back for failing to provide regulators with materials upon request that were necessary in the regulators determination as to whether Morgan Stanley had violated securities law.
Each time the abuse occurs it aides the bottom line profits of Morgan Stanley and thus it generates a higher bonus package for the employee.
But Morgan Stanley's indiscretions have not stopped here as Morgan has seen a considerable number of regulatory actions taken against the firm in this and other years for what regulators have identified as "shoddy record keeping practices" and "for failing to have adequate supervisory systems and procedures". Each of these events costing the investing public considerable personal and financial damages while Morgan Stanley, and the executives, profited handsomely from the lack of Controls.
And as Morgan Stanley, one of the premiere and oldest brokerage firms in the nation, goes so goes Goldman Sachs and the other premiere type firms.
Goldman Sachs and their present and former employees have a litany of pending enforcement cases against the firm including charges of aiding Fannie Mae in providing misleading accounting records along with being part of an international insider trading scheme involving a Goldman Sachs research analyst and a former employee. In each case a lack of supervision and accountability at the firm is the root to the defrauding of the general public.
Going beyond the regulatory agenda's, Goldman Sachs, Morgan Stanley, and a host of other Tier I prime brokers are also being sued by as many as 4 hedge funds for charging the funds a stock borrow fee on hard to borrow securities, and by colluding to jack up these fees, when in fact no stock borrow even transpired. The hedge funds allege that these firms instead simply profited from the illegal charging of clients by pocketing the money without notifying the funds that the borrow never took place.
Now the list of enforcement cases brought against Wall Street, and the list of indiscretions that have cost investors hundreds of billions in personal finance could be individually identified and tallied but that is not necessary. What is necessary to understand is that each could have been avoided had these firms spent the "bonus profits" on setting up and maintaining compliance procedures.
Wall Street executives should have stopped paying themselves first and instead funded the necessary programs to protect the people they serve.
Morgan Stanley is not fresh off the boat; they came across on the Mayflower. Morgan Stanley has grown as the markets have grown and thus have had ample time to put together compliance procedures and processes to be in full compliance with decade old laws. Morgan Stanley didn't't because the risk v. reward was too heavily skewed in their favor and thus innocent people, less compensated people, suffer.
As the average person lives pay check to pay check, Wall street executives are cutting the corners to achieve unimaginable bonuses.
John Mack, Lloyd Blankfein, and the other Wall Street CEO's do not deserve $30, $40, $50, Million dollars in bonuses based on profits until they have spent the appropriate monies to protect the financial safety of all those that put their trust and finances into their greedy hands.
The investors have a right to a market they can trust and the conflicts such as these cannot be tolerated or protected by regulators or Congress. Wall Street CEO's must be held as equally responsible for the indiscretions of these firms as they are in being given such high accolades for the success of such firms.
The future will define what Mr. Mack and Mr. Blankfein left unattended in 2006 but those bonuses will never be changed once the issues finally float to the surface. Risk v. reward comes by way of the instant reward and the delayed risk of an enforcement case taking place somewhere years down the road.
It ultimately comes down to simply math.
Should the executives of Wall Street reap such mind-boggling rewards due to the present success of the business enterprise when such enterprises have not yet spent the revenues necessary to protect the public from the abuses of such businesses? Wall Street executives have already seen the protection of regulators by not holding them personally accountable for fraud within the firms but maybe it is time fraud becomes a major factor in the compensation each receives.
Only a week after Morgan Stanley CEO received word of his $40 Million bonus package, the NY Times and other media sources were reporting how Morgan Stanley "undermined the integrity of the regulatory and arbitration processes, potentially leaving in question the validity of the outcomes in hundreds of cases" and did so by falsely claiming that e-mails had been destroyed, when in fact they had been restored to its system shortly after September 11 using back-up tapes or were never destroyed at all.
For this alone John Mack should be giving back what he rightfully does not deserve. By holding back any settlement to this aging complaint, Morgan Stanley's bottom line is over-inflated and thus, so is Mack's bonus. Morgan Stanley instead taking this money due investors and using it to generate higher profits that will lead to next years bonus package.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006
An online newspaper reporting the issues of Securities Fraud
Wall Street Excess - December 19, 2006
David Patch
It is the Holiday season and one thing is for sure, Wall Street has no grinch in it's midst.
Last week it was reported that Morgan Stanley CEO John Mack would be the recipient of a $40 Million bonus package for his 2006 work performance. Yes, $40 Million BONUS. But Mack would not stand alone in receiving such a mind-boggling bonus. Goldman Sachs CEO Lloyd Blankfein will reportedly take in an every more grotesque $57 Million in bonuses after stepping into the CEO role midway thru the year; June 2006. Not bad for a part time CEO.
Now I am all for capitalism and every individuals right to get the highest compensation that can be achieved but such rights also come with a level of accountability and responsibility. Such expectations are indisputable if such an individual is at the executive level of a publicly traded company where their personal decisions can impact tens of thousands of people or more.
So with $40 Million and $53 Million in bonus packages, have these CEO's lived up to the expectations of integrity and accountability deserving of such grossly inflated pay packages?
Consider that within a week of the announcement that John Mack will receive his $40 Million, the NASD has filed charges against the company for the destruction of critical evidence necessary for investors in bringing arbitration cases against the firm. By law, investors cannot sue their brokers in court for claims of abuse but must take their case to arbitration panels employed by the market regulators. Under arbitration, the evidence necessary in making a case must be provided in many cases by the brokerage firm itself, which is why the law requires each firm to maintain accurate records of all communications between broker and client including e-mail retention.
According to the NASD case filed, Morgan Stanley had destroyed or hid the e-mails necessary in hundreds arbitration cases making it difficult for the investor to make their case against Morgan Stanley. In fact, Morgan Stanley lied to regulators when questioned about the retention of these e-mails claiming the 9/11 tragedy was the cause of the lost e-mails when in fact this was not at all the case.
The result of such abuse was that investors seeking arbitration against Morgan were cheated out of their rightful settlement because Morgan Stanley hid the damaging evidence against them. Instead of settling the dispute and respecting the rights of the abused, Morgan CEO John Mack has decided to fight the regulators. What's worse, this is not the first time Morgan Stanley has seen a regulatory action against them for such abuse. Morgan was fined years back for failing to provide regulators with materials upon request that were necessary in the regulators determination as to whether Morgan Stanley had violated securities law.
Each time the abuse occurs it aides the bottom line profits of Morgan Stanley and thus it generates a higher bonus package for the employee.
But Morgan Stanley's indiscretions have not stopped here as Morgan has seen a considerable number of regulatory actions taken against the firm in this and other years for what regulators have identified as "shoddy record keeping practices" and "for failing to have adequate supervisory systems and procedures". Each of these events costing the investing public considerable personal and financial damages while Morgan Stanley, and the executives, profited handsomely from the lack of Controls.
And as Morgan Stanley, one of the premiere and oldest brokerage firms in the nation, goes so goes Goldman Sachs and the other premiere type firms.
Goldman Sachs and their present and former employees have a litany of pending enforcement cases against the firm including charges of aiding Fannie Mae in providing misleading accounting records along with being part of an international insider trading scheme involving a Goldman Sachs research analyst and a former employee. In each case a lack of supervision and accountability at the firm is the root to the defrauding of the general public.
Going beyond the regulatory agenda's, Goldman Sachs, Morgan Stanley, and a host of other Tier I prime brokers are also being sued by as many as 4 hedge funds for charging the funds a stock borrow fee on hard to borrow securities, and by colluding to jack up these fees, when in fact no stock borrow even transpired. The hedge funds allege that these firms instead simply profited from the illegal charging of clients by pocketing the money without notifying the funds that the borrow never took place.
Now the list of enforcement cases brought against Wall Street, and the list of indiscretions that have cost investors hundreds of billions in personal finance could be individually identified and tallied but that is not necessary. What is necessary to understand is that each could have been avoided had these firms spent the "bonus profits" on setting up and maintaining compliance procedures.
Wall Street executives should have stopped paying themselves first and instead funded the necessary programs to protect the people they serve.
Morgan Stanley is not fresh off the boat; they came across on the Mayflower. Morgan Stanley has grown as the markets have grown and thus have had ample time to put together compliance procedures and processes to be in full compliance with decade old laws. Morgan Stanley didn't't because the risk v. reward was too heavily skewed in their favor and thus innocent people, less compensated people, suffer.
As the average person lives pay check to pay check, Wall street executives are cutting the corners to achieve unimaginable bonuses.
John Mack, Lloyd Blankfein, and the other Wall Street CEO's do not deserve $30, $40, $50, Million dollars in bonuses based on profits until they have spent the appropriate monies to protect the financial safety of all those that put their trust and finances into their greedy hands.
The investors have a right to a market they can trust and the conflicts such as these cannot be tolerated or protected by regulators or Congress. Wall Street CEO's must be held as equally responsible for the indiscretions of these firms as they are in being given such high accolades for the success of such firms.
The future will define what Mr. Mack and Mr. Blankfein left unattended in 2006 but those bonuses will never be changed once the issues finally float to the surface. Risk v. reward comes by way of the instant reward and the delayed risk of an enforcement case taking place somewhere years down the road.
It ultimately comes down to simply math.
Should the executives of Wall Street reap such mind-boggling rewards due to the present success of the business enterprise when such enterprises have not yet spent the revenues necessary to protect the public from the abuses of such businesses? Wall Street executives have already seen the protection of regulators by not holding them personally accountable for fraud within the firms but maybe it is time fraud becomes a major factor in the compensation each receives.
Only a week after Morgan Stanley CEO received word of his $40 Million bonus package, the NY Times and other media sources were reporting how Morgan Stanley "undermined the integrity of the regulatory and arbitration processes, potentially leaving in question the validity of the outcomes in hundreds of cases" and did so by falsely claiming that e-mails had been destroyed, when in fact they had been restored to its system shortly after September 11 using back-up tapes or were never destroyed at all.
For this alone John Mack should be giving back what he rightfully does not deserve. By holding back any settlement to this aging complaint, Morgan Stanley's bottom line is over-inflated and thus, so is Mack's bonus. Morgan Stanley instead taking this money due investors and using it to generate higher profits that will lead to next years bonus package.
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006