Most stockbrokers would kill to have part of Fidelity’s brokerage business. Like others who operate mutual funds, Fidelity Investments has a choice of which stockbrokers to use to buy the stocks and bonds in which its funds invest. Fidelity buys securities in such large volume that the stockbroker who executes the trades will necessarily reap a big commission. Human nature being what it is, brokers anxious for Fidelity’s business do everything they can to influence Fidelity’s decision. (more…)
On March 10, 2008,
in Baby Boomers, Fidelity, Investor Protection, Investors at Risk, Retirees, SEC, Scandals, Securities Industry (general), Senior Citizens,
by Investor's Watchblog
Most stockbrokers would kill to have part of Fidelity’s brokerage business. Like others who operate mutual funds, Fidelity Investments has a choice of which stockbrokers to use to buy the stocks and bonds in which its funds invest. Fidelity buys securities in such large volume that the stockbroker who executes the trades will necessarily reap a big commission. Human [...]
On March 1, 2008,
in Baby Boomers, Firms, Investor Protection, Investors at Risk, Retirees, SEC, Scandals, Securities Industry (general), Senior Citizens, UBS Financial,
by Investor's Watchblog
Miami Herald Investigative Reporter Dan Christensen has written a story that all baby boomers and seniors should read — about a stockbroker with a troubling disciplinary record who slipped past the regulatory gatekeepers to continue doing business. Dozens of his clients now accuse him of losing more than $20 million of their retirement assets while [...]
Miami Herald Investigative Reporter Dan Christensen has written a story that all baby boomers and seniors should read — about a stockbroker with a troubling disciplinary record who slipped past the regulatory gatekeepers to continue doing business. Dozens of his clients now accuse him of losing more than $20 million of their retirement assets while piling up big commissions for himself and his firm. The FBI is investigating. The broker has filed bankruptcy. (more…)
On February 29, 2008,
in Baby Boomers, Investor Protection, Investors at Risk, Retirees, SEC, Scandals, Securities Industry (general), Senior Citizens,
by Investor's Watchblog
Michael West of Australian paper The Age wrote recently on Australia’s spate of corporate scandals and whipsawed securities markets. West writes:
There is much wailing and gnashing of teeth. Stocks are getting shorted. People are losing money. And the blame game for this billowing spate of corporate trashings is now in full swing.
Michael West of Australian paper The Age wrote recently on Australia’s spate of corporate scandals and whipsawed securities markets. West writes:
There is much wailing and gnashing of teeth. Stocks are getting shorted. People are losing money. And the blame game for this billowing spate of corporate trashings is now in full swing. (more…)
On February 11, 2008,
in A.G. Edwards, Collateralized Debt Obligations, Investor Protection, Investors at Risk, Merrill Lynch, Morgan Stanley, SEC, Scandals, Securities Industry (general),
by Investor's Watchblog
The SEC has assembled a subprime working group of about 100 enforcement attorneys to look into whether banks and brokerage firms violated the federal securities laws in how they packaged sub-prime loans, how they valued those securities, and how they disclosed (or not) the risks of such securities to retail investors. Morgan Stanley and Merrill [...]
The SEC has assembled a subprime working group of about 100 enforcement attorneys to look into whether banks and brokerage firms violated the federal securities laws in how they packaged sub-prime loans, how they valued those securities, and how they disclosed (or not) the risks of such securities to retail investors. Morgan Stanley and Merrill Lynch have disclosed that are among the brokerage firms that the SEC is investigating. (more…)
On February 8, 2008,
in Accounting Fraud, Aging Parents, Baby Boomers, Firms, Investor Protection, Investors at Risk, Retirees, SEC, Scams, Scandals, Securities Industry (general), Senior Citizens,
by Investor's Watchblog
The SEC has charged Larry A. Rodda, a former KPMG Consulting principal, with aiding and abetting a “massive financial fraud orchestrated by senior officers at Peregrine Systems, Inc., a San Diego software company that has since been acquired by Hewlett-Packard Company.”The SEC alleged that Rodda signed four sham software license agreements that allowed Peregrine to improperly record [...]
The SEC has charged Larry A. Rodda, a former KPMG Consulting principal, with aiding and abetting a “massive financial fraud orchestrated by senior officers at Peregrine Systems, Inc., a San Diego software company that has since been acquired by Hewlett-Packard Company.”The SEC alleged that Rodda signed four sham software license agreements that allowed Peregrine to improperly record approximately $22 million in revenue. The SEC’s litigation release provides the details: (more…)
On February 6, 2008,
in Investor Protection, Investors at Risk, SEC, Scandals, Securities Industry (general), Uncategorized,
by Investor's Watchblog
Amidst reports that the SEC is investigating possible insider trading in advance of the disclosure of Societe Generale’s $7.4 billion loss, reports continue to pour in that SG had plenty of warning that something was amiss in its trading operations, but chose to ignore it.
The Wall Street Journal reports:
Amidst reports that the SEC is investigating possible insider trading in advance of the disclosure of Societe Generale’s $7.4 billion loss, reports continue to pour in that SG had plenty of warning that something was amiss in its trading operations, but chose to ignore it.
The Wall Street Journal reports: (more…)
On February 5, 2008,
in Firms, Investor Protection, Investors at Risk, Merrill Lynch, Scandals, Securities Industry (general),
by Investor's Watchblog
According to Massachusetts Secretary of State William Galvin, two Merrill Lynch brokers, Carl J. Kipper and Manuel Cho, sold the City of Springfield risky Collateralized Debt Obligations (CDOs) that lost the City almost $13 million when the subprime mortgage crisis hit. Galvin’s complaint alleges that Merrill Lynch “steered the city toward high-risk investments without proper guidance, contrary to [...]
According to Massachusetts Secretary of State William Galvin, two Merrill Lynch brokers, Carl J. Kipper and Manuel Cho, sold the City of Springfield risky Collateralized Debt Obligations (CDOs) that lost the City almost $13 million when the subprime mortgage crisis hit. Galvin’s complaint alleges that Merrill Lynch “steered the city toward high-risk investments without proper guidance, contrary to state law and without warning Springfield officials of the risk ….” (more…)
On January 27, 2008,
in Investor Protection, Investors at Risk, Scandals, Securities Industry (general),
by Investor's Watchblog
One guy. $7.14 billion in losses for one of the biggest banks in Europe.
CNN reports that the scandal at Societe Generale has led France’s largest bank to seek $8.02 billion in ‘additional capital.’ Jerome Kerviel, 31, who allegedly started it all, had been working at Societe since 2000 and had a good understanding of the company’s [...]
One guy. $7.14 billion in losses for one of the biggest banks in Europe.
CNN reports that the scandal at Societe Generale has led France’s largest bank to seek $8.02 billion in ‘additional capital.’ Jerome Kerviel, 31, who allegedly started it all, had been working at Societe since 2000 and had a good understanding of the company’s processing and control procedures. (more…)
On December 16, 2007,
in Baby Boomers, FINRA, Investor Protection, Investors at Risk, Retirees, SEC, Sales Practice Abuses, Scandals, Securities Industry (general), Senior Citizens,
by Investor's Watchblog
Jordan Belfort wound up in jail after running wild on Wall Street. His memoir The Wolf of Wall Street spares no detail in describing how he ran roughshod over almost every securities law ever enacted, while every securities regulator in the country tried to shut him down. His firm, Stratton Oakmont, lasted seven years.
Jordan Belfort wound up in jail after running wild on Wall Street. His memoir The Wolf of Wall Street spares no detail in describing how he ran roughshod over almost every securities law ever enacted, while every securities regulator in the country tried to shut him down. His firm, Stratton Oakmont, lasted seven years. (more…)
On December 6, 2007,
in Baby Boomers, FINRA, Firms, Investor Protection, Investors at Risk, Oppenheimer, Retirees, Scandals, Securities Industry (general), Senior Citizens,
by Investor's Watchblog
Recently the Financial Industry Regulatory Authority fined Oppenheimer & Co., Inc. $1 million for providing false information in response to a FINRA request aimed at determining whether the firm had given its customers mutual fund commission discounts to which they were entitled. In 2005 regulators found that, industry-wide, nearly one out of every three mutual [...]
Recently the Financial Industry Regulatory Authority fined Oppenheimer & Co., Inc. $1 million for providing false information in response to a FINRA request aimed at determining whether the firm had given its customers mutual fund commission discounts to which they were entitled. In 2005 regulators found that, industry-wide, nearly one out of every three mutual fund investors in front-end loaded funds did not receive commission discounts to which they were entitled.
FINRA asked Oppenheimer for a self assessment to determine whether Oppenheimer was among the broker-dealers cheating its customers. FINRA found that Oppenheimer submitted information that it knew to be flawed in response to that request. (more…)
On December 3, 2007,
in AARP, Aging Parents, Baby Boomers, FINRA, Investor Protection, Investors at Risk, Lack of Supervision, Retirees, Scandals, Securities Industry (general), Senior Citizens,
by Investor's Watchblog
Four years after the analyst conflict of interest scandal that rocked Wall Street and led to actions against ten of the world’s biggest brokerage firms, the Financial Industry Regulatory Authority (“FINRA“) has found that Wachovia Capital Markets engaged in the same kind of conduct.
FINRA found that from March 2004 to July 2007, Wachovia failed to adequately [...]
Four years after the analyst conflict of interest scandal that rocked Wall Street and led to actions against ten of the world’s biggest brokerage firms, the Financial Industry Regulatory Authority (“FINRA“) has found that Wachovia Capital Markets engaged in the same kind of conduct.
FINRA found that from March 2004 to July 2007, Wachovia failed to adequately disclose its relationship to companies on which it issued ”buy” recommendations. (more…)
On November 19, 2007,
in Aging Parents, Baby Boomers, FINRA, Investor Protection, Investors at Risk, Retirees, SEC, Sales Practice Abuses, Scams, Scandals, Securities Industry (general), Senior Citizens,
by Investor's Watchblog
Jordan Belfort’s memoir The Wolf of Wall Street is NC-17 rated; but the truth is sometimes vulgar.
Belfort built Stratton Oakmont into one of the most infamous broker-dealers ever to stain FINRA’s membership list. Both before and after being barred from the securities industry, he was the moving force behind several other firm’s, receiving millions per year for funding their operations.The [...]
Jordan Belfort’s memoir The Wolf of Wall Street is NC-17 rated; but the truth is sometimes vulgar.
Belfort built Stratton Oakmont into one of the most infamous broker-dealers ever to stain FINRA’s membership list. Both before and after being barred from the securities industry, he was the moving force behind several other firm’s, receiving millions per year for funding their operations.The story of Belfort’s personal life would consume a month of Jerry Springer shows. But there are several important truths revealed in Belfort’s book from the perspective of the other side of the law.
You may have seen episodes of 48 Hours or 60 Minutes in which the correspondents interview people who formerly made their living by burglary or robbery or some other crime. You pay close attention because you know you are learning from a knowledgeable teacher. The terrific movie, Catch Me If You Can, tells the story of fraudster Frank Abignale, who later became a consultant to the Federal Bureau of Investigation. Those who want to protect themselves listen to those who have broken the law because they reveal dangers that we otherwise would not appreciate. In the next few posts, we’ll take a look at a few of the insights that investors should take from Belfort’s memoir:
They Don’t Fear the Cops
On November 12, 2007,
in Investor Protection, Ponzi schemes, Scams, Scandals,
by Investor's Watchblog
Today’s Wall Street Journal contains the most comprehensive treatment yet of the tangled story of Norman Hsu, the Democratic Party fundraiser who for years was honored as a top donor and bundler, but was exposed this summer as an alleged Ponzi scheme operator. Dozens of private investors lost tens of millions of dollars to Mr. [...]
Today’s Wall Street Journal contains the most comprehensive treatment yet of the tangled story of Norman Hsu, the Democratic Party fundraiser who for years was honored as a top donor and bundler, but was exposed this summer as an alleged Ponzi scheme operator. Dozens of private investors lost tens of millions of dollars to Mr. Hsu. The bad news is that they can expect to recover very little, if any, of their losses. The good news is that their experience can be your education.
Trappings of Success
Mr. Hsu traveled first class, stayed in swank hotels, wore tailored suits, and gave every indication that he had earned the money to fund that lifestyle. The same will be true of any financial criminal. If you remember The Sting with Robert Redford and Paul Newman, or The Spanish Prisoner with Steve Martin, you have some idea of the careful planning and resources that go into constructing a successful scam.
Beware of Friends
The WSJ article details how some victims of Mr. Hsu’s investments were introduced by friends who vouched for his credibility. These friends had made money with Mr. Hsu, or believed they had.
A good salesman can sell almost anything, even a Ponzi scheme. Imagine how effective that same salesman is when he comes recommended by the president of the Chamber of Commerce, an elder in your church, or someone you would trust with the lives of your children. Although they don’t know it yet, such people are the early victims of the Ponzi scheme. The money they have received as a ‘return’ on their investment has come not from any profit generating enterprise, but from the principal amounts invested by later investors. Thousands of friendships have been broken by these scams, because the fraud artist frequently enlists early investors to help find later investors.
Of course, not all investments recommended by friends are scams. Your best defense to falling victim to a scam is to follow the advice of Benjamin Franklin who, when urging the ratification of the Constitution, urged the delegates to “doubt a litte of their own infallibility.” Think enough of your friendship to discount the recommendation, and seek knowledgable, indepedent verification of the investment as legitimate. You’ll save not only your money, but also your friendship.
On November 8, 2007,
in Investor Protection, Scandals, Securities Industry (general),
by Investor's Watchblog
Thanks for checking out Investor’s Watchblog. Want to know what we’re all about and why we’re here?
Having spent six years protecting investors as part of the Enforcement Division of the Securities and Exchange Commission and more than a decade since, I have seen things that few of you have ever seen, things that speak to [...]
Thanks for checking out Investor’s Watchblog. Want to know what we’re all about and why we’re here?
Having spent six years protecting investors as part of the Enforcement Division of the Securities and Exchange Commission and more than a decade since, I have seen things that few of you have ever seen, things that speak to the character of an industry that 78 million retiring baby boomers will rely upon to some extent to secure their futures.
Trust me — you wouldn’t want your daughter to date this industry. It may be smooth. It may dress impeccably. It may be eloquent. But it has bad intentions.
The Wall Street Journal quotes sources who say that Merrill Lynch tried to hide its losses from the credit crisis by engaging in shady transactions with hedge funds it operates. If the allegations prove true, will any retiring baby boomer choose to avoid Merrill because of it? Not likely. The industry is wealthy enough to create its own reality. Serious violations of laws intended to protect individual investors pass through our memories faster than a hot knife through butter, aided by advertising and public relations budgets bigger than the GDP of some nations.
Investor’s Watchblog’s aim is to protect investors by commenting on scandals and scams, shining a light into the dark corners of the securities industry, letting you see what I saw as an Enforcement Branch Chief, and helping you protect what you have worked so hard to save.
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What Spitzer Can Teach Investors
Eliot Spitzer helped expose Wall Street’s culture of corruption. He couldn’t change it; no one can. But he held them accountable. He was more aggressive in the investors’ interest than any attorney general before him and has inspired other state regulators to follow his lead.
Eliot Spitzer helped expose Wall Street’s culture of corruption. He couldn’t change it; no one can. But he held them accountable. He was more aggressive in the investors’ interest than any attorney general before him and has inspired other state regulators to follow his lead. (more…)