Tag Archives: Sifma

Stark Lessons from Wall Street’s #MeToo Moment

Women filed a wave of lawsuits and arbitrations against financial firms in the 1990s and early 2000s, disgusted by a culture of rampant sexual harassment and gender discrimination. The biggest cases of that era collectively drew thousands of participants in class actions and led to large settlements including $150 million against Smith Barney and $250 million against Merrill Lynch.

At a time when the long-term consequences of #MeToo on women’s careers is an open questions, I looked at court records, tracked down plaintiffs and spoke with a dozen employment lawyers to see how things had turned out for the women — and how things had turned out for the men who allegedly harassed them. My findings were sobering. You can read my story today for The Intercept here.

Wall Street Goes Silent on #MeToo

A woman who is sexually harassed at work is six and a half times more likely to change jobs than a woman who is not. So you might think that, a year and a half into the #MeToo movement, sexual harassment would be a front-burner issue for the people paid to diversity Wall Street.

Yet at a two-day conference of diversity experts in the securities industry in New York in late May, not one of the seven panels addressed the challenge of sexual harassment in the workplace. I wrote about it in my latest piece for The Intercept. You can read it here.

Under Trump’s SEC, Wall Street Secrecy Expands as Enforcement Shrinks

Jay Clayton, Donald Trump’s choice to run the Securities and Exchange Commission, is a man Wall Street itself might have picked to run its most important federal regulator. Except for two years clerking for a federal judge after graduating law school, he has worked his entire adult life at Sullivan & Cromwell, an elite law firm based in downtown Manhattan that includes many of the country’s largest publicly traded companies as clients.

Enforcement cases and fines have gone down since Clayton was sworn in last May, and the SEC has given Wall Street and corporate America any number of gifts, including the easing of public company disclosure requirements that some experts consider key for investors looking to understand a company. My colleague Gary Rivlin and I wrote about Clayton’s SEC for The Intercept. You can read our story here.

How Wall Street Silences Women

Among the business sectors largely absent from the current deluge of sexual harassment revelations is the financial services industry, a behemoth that employs 3.2 million people in the United States and is infamous for abuse and discrimination targeting women. In my story for The Intercept, I talk about women’s fate in finance and the reasons that most stay quiet. You can read it here.

How Bad Financial Advice Can Literally Make You Sick

Holly Marchak and her husband lost $2.3 million when they were defrauded in the Ponzi scheme of the so-called “Brooklyn Madoff.” Nine years later, she’s still paying for it.

She spends thousands of dollars a year on prescription drugs alone. Marchak, who lives in Orlando, Fla., began weeping as she told me the story of Philip Barry, now in federal prison, who defrauded her and her husband Alex Marchak. The money had been proceeds from the sale of a building that housed a funeral home the couple owned.

Marchak, 62, says she takes medication for anxiety, high blood pressure, asthma and heart problems. “There are times we don’t want to wake up in the morning,” she said. “My doctor has a mile-long, thick file on me and says it’s all stress-related.”

Lawyers who represent investors say the stress of a serious financial loss can trigger a whole new wave of costs for clients. Medical research has linked stress to viral infections, asthma, atherosclerosis, ulcers and increased risk for diabetesmellitus, among other diseases. More focused studies highlight the hazards of financial stress. You can read the full story here.

How Many Bad Brokers Could There Be? Don’t Play the Percentages

When you consider that 73 percent of financial advisers who get caught engaging in misconduct are still doing business with investors a year later, you could just cross your fingers and hope your broker is one of the good ones.

Better yet, you could leaf through the grim results of a study by three finance professors released earlier this month. They looked at records of 1.2 million people registered with the Financial Industry Regulatory Authority, or Finra, to do business with the public. I wrote about the study in my latest column for TheStreet. You can read it here.

Wall Street’s unique way of “protecting” small investors

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.

Wall Street Will Only Go So Far to Help Older Investors

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.