Excellence in Financial Journalism Award

The New York State Society of CPAs said today that I have won the 2016 Excellence in Financial Journalism Award for my columns for TheStreet.com.

From the judges:

Susan Antilla used her solid reporting and analytical skills in “Wall Street Has a Unique Way of ‘Protecting’ Small Investors,” as she exposed Wall Street for its efforts to avoid change that could possibly improve access to stockbroker records. Throughout her research, she also called out the securities industry for its empty arguments that tougher regulations would force brokers to drop smaller investors as customers.

 

In Push for Change, Finra Is Opposed by the Wall St. Firms It Regulates

Brokerage firms are up in arms over a proposal by one of their regulators to collect information about customers’ accounts and use it to keep tabs on salespeople.

That may sound like a great idea on the face of it, but the regulator in question, the Financial Industry Regulatory Authority, or Finra, gets its funding from the firms it’s supposed to be regulating. And those firms don’t like the idea of sharing data on their customers’ buys, sells and portfolio positions.

I wrote about the battle between Finra and its members in The New York Times today. Barbara Roper, director of investor protection at the Consumer Federation of America, told me that Finra’s proposal to get monthly data about activity in investors’ accounts could go a long way in preventing fraud because it would let Finra jump on problems more quickly:

“It creates a real deterrent,” she said. “Who’s going to churn an account if it immediately sends off a warning siren at Finra?”

You can read the story here.

Finally, the Regulators Are Trying to Protect You. But It’s Nothing But Bad News for Investors

Finra, which is the outfit that Wall Street pays to regulate itself, is pushing hard on a proposal that it thinks will help nail bad guys on Wall Street.

It sounds great on the surface: Give arbitrators permission to refer a rogue to the director of enforcement even as an investor’s hearing is going on. You know, so we can catch people like Bernie Madoff, who was such a trusted name on Wall Street that he was chairman of the Nasdaq Stock Market.

As of now, arbitrators have to wait until a hearing is over before they can tell headquarters that a villain is on the loose. Finra wants to be able to get on the case ASAP.

Nice idea, if only it didn’t have the potential to wreak havoc on the arbitration hearing of the poor slob who’s in the middle of trying to get his or her case resolved. It’s yet another example of the nutty things that can happen when you bar investors from going to court, where you don’t have all the secrecy of arbitration and thus don’t have to jump through hoops to figure out ways to get the word out. Here’s my story published tonight on TheStreet.com.

Anworth Mortgage, Your Greed is Showing

“Do your homework” sounds like reasonable enough advice when you’re leafing through a personal finance magazine or listening to the babble of the talking heads on a financial show. But is it practical?

In my story today for TheStreet Foundation, I write about a publicly traded real-estate investment trust, Anworth Mortgage Asset Corp. Its shareholders will vote at the company’s annual meeting today to determine whether the current board will be ousted in favor of a group proposed by activist investor Arthur Lipson.

I’m not so interested in the pyrotechnics of the fight itself. I’m just wondering if there’s any way that a shareholder without a private investigator’s license could possibly understand the far-flung activities of Anworth management without quitting their day jobs. From my story:

A thorough vetting of the company’s officials would take an investor from Anworth’s standard filings with the Securities & Exchange Commission to a hodge-podge of regulatory documents that occasionally outline mishandling of investor money by stock brokers who worked for a brokerage firm controlled by the CEO.

We really ought to stop giving the public the impression that if they just took the time to read an annual report, or a prospectus, or whatever, that they can take control of their portfolio and stay on top of things.

It’s my first column as founding journalism fellow at TheStreet Foundation, and I’m looking forward to producing more. You can read the column here.

New Evidence May Reopen Broker Fraud Case

You may recall the bizarre story of the Long Island stockbroker who hoodwinked the producers of the Broadway show “Rebecca” into thinking he’d lined up millions of dollars for the show. The producers put up $60,000 and the broker, Mark C. Hotton, put the money in his pocket.

It was a strange tale in many ways, not the least of which was that Hotton had been fleecing investors of millions of dollars for years before he wound up in headlines for picking up a paltry $60,000 from the show biz chumps.

I nearly choked when I read that Manhattan U.S. Attorney Preet Bharara had said in a press release that the FBI had uncovered Hotton’s misdeeds “with lightning speed” in 2012. Hotton had been fleecing people ever since he forged documents and bounced a $31,550 check to buy some used cars in 1990. That’s some pretty slow lightning.

In my story for The New York Times last week, I wrote about the latest twist in Hotton’s story. His former employer, Oppenheimer & Co., had been ordered by arbitrators to pay out only $2.5 million of the $5 million that a married couple had lost at Hotton’s hands. Then, six months later, their lawyer discovered evidence that the firm had held back a smoking gun. Read about it here.

 

Wall Street Says It’s Classier Than “Wolf of Wall Street.” Really?

The depiction of stock brokers in that “Wolf of Wall Street” movie has the securities industry on the defensive. In my column today for Investopedia.com, I talk about how a faction that considers itself the “real” Wall Street is anxious to get the word out that it has no similarity to the thugs who appear in the movie with Leonardo DiCaprio.

Ask a pal at a Wall Street firm about the box-office hit The Wolf of Wall Street, and brace for one of those sour faces that suggests there’s a bad smell in the room. Those sex-obsessed, drug-taking thugs who ripped off investors in Martin Scorsese’s all-time, biggest-grossing film have nothing in common with the refined investment professionals who do business on real Wall Street, they will tell you.

But that’s not entirely true. The Wall Streeters who wear expensive suits and do business in Manhattan may not be tossing midgets around the trading room, as the perhaps less genteel Long Island brokers in the movie did. They aren’t above hurting investors, though.

“If people understood the similarities between Belfort and Wall Street, there would be a riot in this country,” says Dennis Kelleher, CEO of the investor advocacy group Better Markets Inc. Kelleher explains, for example, that Belfort’s operation dealt in barely-regulated penny stocks that came with either skimpy information or documents that twisted or obfuscated the facts. On conventional Wall Street, says Kelleher, firms bask in the convenience of the opaque, too, trading the kinds of over-the-counter derivatives that helped crash the economy in 2008.

Here’s a link to the story.

One in Five Senior Citizens Fall for Financial Scams

As many times as I’ve run across stories about financial ripoffs of the elderly, I still can’t help but be shocked at the cruelty it takes to fleece people who are so fragile. In my article yesterday for TheStreet.com, I wrote about how much worse the problem has become, and how it will only get worse from here.

While elder financial abuse is in some respects nothing new in the annals of fraud, the aging of the baby boom generation and Americans’ increasing longevity are coming together in a perfect storm that could cause the problem to skyrocket. A 2010 survey by the Metropolitan Life Foundation estimated that victims of elder financial abuse lost at least $2.9 billion in 2010, up 12% from 2008.

I begin with a story about 73-year-old Charles S. Bacino, who lay dying in a hospital bed in 2012 when the man he called his “financial affairs manager” came by to visit and persuaded him to invest $82,000 in a cocoa and banana plantation in Ecuador. Mr. Bacino, who was hooked up to a morphine drip to soothe the pain of his pancreatic cancer, gave his keys to the man so that he could fetch his checkbook. Less than a month later, Mr. Bacino was dead and the whereabouts of his money was a mystery.

You can read the full article here.

Sabew Commentary Award

Today, the Society of American Business Editors and Writers said that I won the “Best in Business” award for commentary in the news agency category for columns I wrote in 2013 for Bloomberg View.

Here’s a list of all the winners, including writers worth following on a regular basis, such as Jesse Eisinger of ProPublica and Michael Smallberg of The Project on Government Oversight (POGO).

If you’re looking for smart and talented financial journalists worth adding to your regular reading list, take a few minutes to go through the roster of Sabew winners.

Notes from the judges on my submission:

NEWS AGENCIES COMMENTARY

Winner: Susan Antilla, Bloomberg View, for her columns.

Terrific topics. Tough, engaging, enlightening, head-snapping. Well-reasoned arguments. Writes with authority and insight in a simple, declarative style that doesnt wander. No navel-gazing. Sophisticated humor used lightly in a way that advances the argument. Not humor for humors sake.

Here are links to the stories the judges considered:

Do Deutsche Bank’s ‘Prettier’ Women Get the Best?

JP Morgan’s Teflon CEO Glides Past Reputation Hits

Hate Follows When the Police Try to Do Their Job

Top Stock Picks of 2013 Lose Out to Honey Boo-Boo

The Agency that Helps Consumers, Irritates Republicans

When a Federal agency reins in sleazy debt collectors and slipshod mortgage servicers, that’s more than enough to get politicians enraged — at the agency, not the bad guys.

The two-year-old Consumer Financial Protection Bureau has already collected $3 billion to return to aggrieved consumers, and has done such good follow-up when consumers call to complain that lenders and others who fall under its jurisdiction are actually helping customers right away rather than face the ire of the CFPB.

In my story for TheStreet.com today, I talk about the bizarre reaction to CFPB from Republicans in the House of Representatives.

A gaggle of chest-beating Republicans has been in attack mode against the CFPB since before it even opened its doors, trashing the agency’s architect, Massachusetts senator Elizabeth Warren, and passing bills to try to weaken its authority. The latest effort, up for a vote in the House of Representatives in coming weeks: the Consumer Financial Protection and Soundness Improvement Act of 2013, which would reduce the agency’s pay schedule and make it easier to overturn its rules, among other curtailments.

Jeb Hensarling, chairman of the House Financial Services Committee, actually makes a good point when he criticizes CFPB for collecting extensive consumer data that is a worry in these times of compromised personal information, but he’s so over-the-top in his condemnations that his constructive criticisms could get lost.

A favorite practice of Hensarling’s is to introduce CFPB Director Richard Cordray at official hearings with taunts about the agency being “accountable to no one,” which is always kind of funny since the CFPB chief is sitting across from his cantankerous questioners precisely because he is being held accountable. Hensarling managed to squeeze references to Cordray as “credit czar” and “national nanny” and “benevolent financial product dictator” in a single sentence at a hearing in September.

You can read my story here.

Do You Really Want to Learn Investing From These Guys?

“Customers first,” I always say, and who knew that the securities industry would actually come around to saying the same? The lobbying group for Wall Street, the Securities Industry and Financial Markets Association, unveiled some new battle cries for 2014 at a meeting in New York in November, “Customers First” and “Helping Main Street Prosper” among them.

I wrote about Sifma’s upcoming efforts to plant seeds of goodwill with the public in my new column for Investopedia.com this week:

The financial industry’s trade group is on a mission, and the public relations tour de force begins this month with the launch of a capital markets literacy effort that SIFMA calls “Invest it Forward.”

Sifma actually has a financial literacy winner in its popular “Stock Market Game” that gives school kids $100,000 in virtual money to trade. Kids who play the game improve their  literacy scores, but the champions can be a tad precocious:

A fifth grader from East Brunswick, N.J., took to the stage at the Marriott to receive her SIFMA award for investment prowess, and said the teamwork approach to investing sometimes cramped her style. “I hated when my team was arguing because we were just wasting time, and time wasted is virtual money lost,” she said. Could somebody spring for a copy of Graham and Dodd’s “Security Analysis” for this child?

You might check to see if your wallet is still in your pocket when you’re listening to Sifma’s pro-investor pitch. You can read the column here.

Are you a lowly Main Street investor? Well, nobody cares what you think about financial reform

It’s never a great time to be a lowly member of the investing public looking for protection from the sharks of finance. But today? Well, try to lower your expectations a tad more.

Deep-pocketed banks are dominating the process of writing the new financial rules mandated by the Dodd-Frank Act. It isn’t that there’s nobody advocating for small investors. It’s just that the few organizations that make a case for the public are outgunned by the well-funded financial industry.

“Despite a significant expansion in the number of foot soldiers out there working in the public interest on these financial issues, we are still completely overwhelmed by the industry lobbyists,” Dennis Kelleher, chief executive officer of Better Markets, told me.

I wrote about the lopsided battle to influence the new financial rules in my Bloomberg View column tonight. You can read it here.

 

 

Top stock picks of 2013 lose out to Honey Boo Boo

You’ve been reading them again, haven’t you? I’m talking about those annual “best investment ideas” that you’re seeing on every TV business show and in all your favorite newspapers, magazines, and blogs.

Stop reading them. Their advice stinks at least half the time, which means — at best — you lose half the time and win half the time. You do the math.

I wrote about the useless “Best ideas of 2013″ style articles in my latest column for Bloomberg: Top Stock picks of 2013 lose out to Honey Boo Boo:

“My advice? When you see one of those how-to articles, retreat to the kitchen for what’s left of the holiday eggnog and shut off the computer. If some TV stock jock is interviewing a Wall Street star about a best pick for the year ahead, grab the remote and surf for a rerun of “Here Comes Honey Boo Boo.” At least it won’t be you who is being exploited.”

You can read the story here.

‘Dumb Money’ Is Staring Most of Us in the Face

Americans are pretty much illiterate when it comes to finance. They don’t know how to read a stock trade confirmation and have problems figuring out how much commission they’re paying their brokers on a mutual fund sale.

For years, professionals on Wall Street have sneered at the public as “the dumb money.” Well, they may not be geniuses on Wall Street, either. But they’re right that retail investors could use some serious coaching.

A recent report by the Securities and Exchange Commission mapped out in 182 painful pages how little the public understands about finance (which suits some people on Wall Street just fine, by the way). I talk about the grim details in my latest Bloomberg View column:

 ”Consider the profile of the 4,800 investors surveyed for the report, which concluded that they “lack basic financial literacy.” More than half had full-time jobs, 11 percent had part-time jobs, 70 percent had at least a two-year college degree and 63 percent had annual income of more than $50,000. We’re not talking about Mitt Romney’s indolent moochers here. The dumb money could be your neighbor. Or you.”

The results have inspired calls for financial literacy programs starting even in elementary school, but let’s get real. From the looks of things, school administrators don’t even have the resources for plain-vanilla literacy programs, let alone special classes in personal investing.

An alternative to new programs: At least get the public smarter about avoiding fraud. I have some ideas about that that you can read here.

Vetting a Stock Broker? Pay Attention to Who’s Supplying the Records

Investors are spending more time checking on the backgrounds of the financial types who pitch for their business, and that — mostly — is a good thing.

The public used a regulatory database to check the records of 14.2 million stockbrokers and advisers last year, according to the Financial Industry Regulatory Authority, known as Finra, a self-regulatory group that’s financed by Wall Street. That’s more than double the 6.7 million searches in 2007, the year before the financial crisis began.

Nothing wrong with investors getting more vigilant, of course. But there are some important caveats about what investors get when they check in with a broker-vetting site.

Finra’s records don’t include lawsuits against brokers that aren’t considered “investment-related.” That means that a lot of brokers who are exposed to the possibility of big judgments have official records that say nothing about that exposure.

And then there’s the issue of the freebie websites popping up to help investors vet brokers. Check the fine print, and you learn that some of those sites get their revenues from advisors who pay to be featured. If you get it for free, and the broker pays to get his or her name in front of you on the site, can it really be investor-friendly?

I took a look at the broker background-checking business in my latest column for Bloomberg View. Read article.