On Jan. 6, the U.S. Attorney for the Southern District of New York charged stockbroker Larry S. Werbel with conspiracy, securities fraud, wire fraud, investment adviser fraud and making false statements. But regulators had been aware of Werbel’s dicey recommendations of penny stocks to clueless customers five years before that.The sordid tale is but the latest example of authorities doing too little, too late.
You can read my column for TheStreet here.
As you’re curled up on the couch watching ABC’s Bernie Madoff series, it’s understandable if you start getting a little edgy. What about the guy or gal running your money?
I took the occasion of ABC’s widely watched series to remind investors that there actually are things they can do to check a broker’s record. You can read my column for TheStreet here.
When it comes to the U.S. Chamber of Commerce, you know the drill. Regulation is bad. Dirty energy is good.
And why shouldn’t it be? We are talking, of course, about Corporate America’s biggest booster.
In advance of the annual “State of American Business” speech by Thomas J. Donohue, the Godfather of corporate lobbying, I made some predictions about what the speech would include. I concede it was not exactly a challenging task. But I did have a little fun with the Chamber’s always-predictable hypocrisies. You can read my column for TheStreet.com here.
Business this year often came out a winner at the public’s expense. But that isn’t all bad, because it gives us an excuse to pause and recognize the dubious accomplishments of the victors.
We begin with the winner of the Whiner’s Award: J.P. Morgan CEO Jamie Dimon is the man who can’t complain enough about how hard it is to put up with regulations after his company breaks the law.
You can read about Dimon and the other winners of this year’s “Most Shameful” awards in my column today for TheStreet.
Over the years, the mutual fund giant the Vanguard Group has had no peer among financial companies when it comes to goodwill from customers and the media. It regularly dominates various “best” mutual fund lists put together by financial publications. Founder John C. Bogle is so celebrated for his focus on low costs and doing the right thing for the small investor that he’s frequently referred to as “Saint Jack.”
So why is a vocal collection of current and former employees putting so much energy into blasting the heralded operation? I address that question in my latest column for TheStreet, which you can read here.
Is the person who handles your money a stock broker or an investment adviser?
It makes a difference. Investment advisers, who are registered with the Securities and Exchange Commission, are held to a fiduciary standard, which means they have to put your interest ahead of theirs. If an adviser is choosing from a list of 5 similar mutual funds that might be suitable for you, he or she can’t pick the one with the biggest fees.
Brokers, who are registered with the self-regulatory organization Finra, can look at that same list of 5 suitable funds and pick the one that puts the most money in their pockets. Regulators who watch over retirement funds at the Department of Labor don’t like that brokers can get away with that, and have proposed a rule that would force them to put your interests first just like advisers do.
Wall Street has been having an institutional temper tantrum over the idea that its brokers might have to put customers’ interests first. And the industry has actually concocted an argument that putting customers’ interests first would not be in customers’ best interest. I’m serious.
You can read about it here in my latest column for TheStreet.
Check out your securities firm’s pitch in TV and print ads or on its web site. Chance are your broker has painted a picture of a paternalistic organization that’s devoted to doing the best thing for you and your portfolio over a period of many years.
But don’t count on that if you wind up facing them across the table at securities arbitration — your only choice in an industry that won’t open an account unless you agree to give up your right to sue in court. Lose money after broken promises that a product is safe or that a broker will be watching over your account, and you may quickly learn that all those assurances were nothing but fluff.
In my column today for TheStreet, I talk about the ways in which Wall Street tries to wiggle out of its responsibilities to its customers, arguing among other things that customers are the ones obliged to monitor their accounts. You can read it here.
Last week’s $19.5 million settlement between investment bank UBS and securities regulators is just the latest example of why Mom and Pop have no business getting involved with Wall Street’s most convoluted creations.
The Securities and Exchange Commission said on Oct. 13 that UBS had given investors false or misleading information about the structured debt securities known as “Medium Term Securities Linked to the UBS V10 Currency Index with Volatility Cap.”
Products with interminable names often wind up being products that are too complicated for a math Ph.D. to understand, never mind the average investor. (Or their sometimes hapless brokers, who sometimes whine like babies that they’ve been duped by their firms when products blow up.) You can learn a lot of lessons by examining the flaws in the UBS V10. I talk about those lessons in my latest column for TheStreet, which you can read here.
State securities regulators unveiled a plan at their annual meeting last week that zeroed in on the role stockbrokers can play in sounding the alarm that a senior is at risk of being ripped off.
The securities industry and its regulators have been tripping over themselves trying to make things safer for elderly investors. But the new proposal by The North American Securities Administrators Association (NASAA) may have gone too far for Wall Street’s liking.
Stockbrokers say they would like to be able to tell authorities when they suspect that an elderly client is at risk of financial exploitation. So NASAA and others have been working on laws and regulations that would allow brokers to report their suspicions without violating privacy laws. Various proposals also have allowed brokers to decline to execute a transaction for 10 days if they suspect something fishy is going on.
The NASAA proposal would make it mandatory for brokers to report their suspicions. But it’s likely that the industry won’t go for that idea, preferring instead to have the option of looking the other way when they suspect financial abuse.
You can read my story for TheStreet here.
The Vanguard Group, the world’s largest mutual fund company, has fired a whistleblower who shared information with TheStreet about deficiencies in the company’s customer account security.
Karen Brock, a client relationship administrator in Vanguard’s Scottsdale, Ariz., office, had told me that customers could access their Vanguard accounts even after entering typographical errors in their personal security answers. In my own account at Vanguard, I have repeatedly tested her assertions and found them to be true.
Brock also had detailed the complaints of a customer who said that he had asked his son to mimic his voice to test Vanguard’s “Voice Verification System.” Vanguard’s system allowed the son to gain access to the father’s account, Brock said. She also shared an internal training document where the names, email addresses, phone numbers and account numbers of several current or prospective clients had evaded the redaction process.
You can read my article about Brock’s firing here. You can see the original article that led to the firing here.
As if a turbulent day for stocks wasn’t problem enough for investors, glitches in the websites of many brokerage firms added to the public’s headaches today.
Testy customers took to Twitter to blast their brokerage firms and mutual fund companies for Web sites that had crashed, leaving them unable to execute trades in a volatile market.
As always, euphemisms abounded. Brokerage firm spokespeople said they had “a slowness issue,” or “a brief period of sporadic Web site inaccessibility,” and the like. But a crash? Not us.
Investors weren’t buying it. “@TDAmeritrade seriously? your servers are crashing today,” wrote one customer. And another: “What a disaster. Time for a new broker.”
You can read my article for TheStreet here.
CNBC’s SquawkBox invited me in yesterday to discuss my story about The Vanguard Group’s online security. A whistleblower has been speaking with me on the record about a complaint she filed against Vanguard with the Securities and Exchange Commission. You can read the article here.
And here’s the CNBC video:
A whistleblower has gone to the Securities and Exchange Commission with complaints about the security of customer accounts and information at The Vanguard Group.
The world’s largest mutual fund company told me that its security is strong. But the whistleblower, who spoke to me on the record about her complaints, disagrees. You can read my latest column for TheStreet here.
The good news: A problem brokerage firm is shutting its doors.
The bad news: A lot of its bad brokers will be finding work elsewhere.
I wrote about the shutdown of Atlanta-based J.P. Turner Associates in my latest column for TheStreet. You can read it here.
If you read the warm-and-fuzzy ads and Web site copy, you’d be convinced that you were a VIP in your stockbroker’s life. So why would your best-pal broker not want to work under a standard that he or she put your interests first?
The sad answer is in my latest column for TheStreet. You can read it here.
The securities industry doesn’t like the idea of reminding investors to check the records of their stock brokers. So when Finra suggested that there be a hyperlink on brokerage firms’ home pages to take customers to its BrokerCheck tool, the industry went on a letter-writing campaign to oppose it.
My personal favorite: The brokerage firm chief compliance officer who told Finra he was worried about “unscrupulous investors.” Yep, you read that right. Here’s my column for TheStreet on Wall Street’s latest anti-investor campaign.
Finra arbitration is often a surprise to investors — not least of all because so many Wall Street customers have no idea that they sign away their right to court when they open an account.
But how about the surprise of learning that one of your arbitrators had been indicted? Or that he had said he was a lawyer, but wasn’t?
My June 24 column for TheStreet tells about Finra’s latest surprise arbitrator — the guy who was arrested for being a Peeping Tom. Really. You can read it here.