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News ::
Who are the better swindlers? (part II) - and the winner is! (english)
08 Dec 2002
All's quiet on Wall Street, no one is going to the can (jail. Fines are minuscule compared to how much these would be embezzlers got away with. In Part One I discussed the meeting in Albany NY between the Securities and Exchange Commission, the New York attorney general, Mr. Eliot Spitzer and a host of Wall Street's better known investment bankers and lawyers. The meeting was being held to discuss the fines to be levied for giving investors misleading information.
eliot_spitzerke8u8o.jpg
All's quiet on Wall Street, no one is going to the can (jail. Fines are minuscule compared to how much these would be embezzlers got away with. In Part One I discussed the meeting in Albany NY between the Securities and Exchange Commission, the New York attorney general, Mr. Eliot Spitzer and a host of Wall Street's better known investment bankers and lawyers. The meeting was being held to discuss the fines to be levied for giving investors misleading information.
Read
Part I of Who Are The Better Swindlers>>

Who
are the better swindlers? (part II)
- and the winner is!
By
Eric Stevenson - Axcess
Business News
In Part One
I discussed the meeting in Albany NY between the Securities and
Exchange Commission, the New York attorney general, Mr. Eliot Spitzer
and a host of Wall Street's better known investment bankers and
lawyers. The meeting was being held to discuss the fines to be levied
for giving investors misleading information. The mass media had
written about it, of course they would it has mass appeal, broad
interest and makes great copy if you need that to sell advertising.
But that's a subject for another day. All's quiet on Wall Street,
no one is going to the can (jail). Fines are minuscule compared
to how much these would be embezzlers got away with.
Fines my
butt! Who do these guys think they're fooling? The worms! They
were interested in padding their own budgets and getting credit
for having saved all of us poor individual investors they're sworn
to protect. Spitzer's boys got their cut and the SEC's got theirs.
But what about you and I? Are they doing anything for the misleading
acts they laid on you or I? Answer: no. It reminds me of that country
western song,"she got the gold mine, I got the shaft".
Heard that tune before?
Give Michael
Milken Back His Life
During
the heyday of junk bonds (80's) the regulators didn't focus on fines
for their budgets, they focused on prosecution for the people who
lost their savings and it was Michael Milken they aimed that gun
of retribution at when they pulled the trigger. Milken wasn't alone
in that blast. Many others caught the flak of that shot besides
old Mike.
I wonder what
Mr. Milken thinks of all of this? Would it make him bitter to think
that these high and mighty investment banking firms got away with
it for a mere $1 billion in fines and no one was prosecuted? No
one got their money back? Ha! He's got to wonder about it all. If
any of you readers can reach Mr. Milken, I'd love to get his view
on all of this! Come on Mike, email
me!
Guess Who
Won!
Well the jury's
in, we've decided who's bilked more out of widows and orphans, Wall
Streets finest or the penny stock promoters with their hit and run
shell deals. Do you think you know the answer? Why Wall Street's
finest wins, hands down!
If
you added up every penny stock promoters' fraudulent gains - over
the last 20 years, you still couldn't touch Wall Street's finest
for what they got away with in-just-one-year! That's hard to believe
isn't it? What was a research report on Worldcom worth anyway? Billions,
that's how much. Did any of you loose money in Worldcom? Just a
couple of you, eh? There again, it's fines imposed on the company!
But there's
hope, the fed's singling out individuals, like Worldcom's Mr. Ebbers
whose facing prison. As are a few other top executives from other
companies. Axcess Business News had alerted its readers to this
dilemma coming (see, Big-Assed
CEO's Heading For the Can). Our alert financial columnist, Ms.
Freddie Mooche had cautioned readers on both Qwest and Worldcom
30 days before Standard & Poor's had lowered their credit rating.-:)
She then started kicking
Bank of America for having over $1.4 billion in outstanding
loans with those two Telco's. You gotta love her grit and guts.
Good call Freddie!
All that was
going on right when Wall Street was feeling the heat for giving
misleading information to investors. So it was no coincidence that
Wall Street's finest never made one peep about cautioning
investors over Bank of America. In fact, BofA at that time was trading
at stellar levels.
Just before
Thanksgiving I saw on TV that Bank of America had announced layoffs
due to lower than expected earnings and potential loan losses. Say
happy holidays to all those folks who got a pink slip instead of
a Turkey that week! If there are any X-Bank of America employees
out there reading this who were in those holiday ranks of balance
sheet bliss I'd love to hear your side of the story! Names shall
remain anonymous, so email
me!
You may think
I've gotten off track, hardly. My point with the above is lot's
of problems already existed but Wall Street's finest is a real good
old boy club. They're not about to bite the hand that feeds them,
telcos sans Bank of America. Bank of America is big player in supplying
information and their analysts are still at it, just like Schwab's
information partner, Market Watch. Safeway had been recommended
as a "strong buy" by Bank of America the very day the
company came out with news about lower than expected earnings and
cash flow problems. The stock slipped from investors' hands like
a wet bottle of milk in front of the dairy cooler, (clean up on
isle #4!) dropping from $25 down to $19 in a matter of one week
but it has recovered some since. (ya, since Bank of America stopped
dumping institutional shares into unsuspecting consumers' portfolios!)
I hate to say
this but Freddie called that one too.
The same day Bank of America upped its rating, she sounded the alarm
and picked SWY as one of her "worst
picks". Guess who SWY's lender is?
That takes guts
on the part of both Schwab and Bank of America; still at it, and
right in front of the regulators' noses! Think anybody at the SEC
is going to do anything about that? What about the thousands of
investors who bought SWY the day Bank of America increased its rating
to Strong Buy? Think their BofA brokers' going to call them up and
say, "gee, we might have a problem here with that research
report on SWY and I may have forgotten to mention the company was
in arrears on their line of credit at the time we sent you that,
but, I'm in the investment banking subsidiary, not the lending side
so its not our fault. We didn't know about it, sorry!" Ya,
right... The monster still lives!
Finding the
monster
You
can't crab a pitchfork and start heading up towards the castle with
the rest of the villagers to kill the monster (love them old black
and white movies). Neither can the SEC head to Wall Street with
the same approach. Only they're wearing suits and carrying sopeaneaus
instead of torches and pitchforks! Maybe if they switched equipment
they'd have a better chance!
There was so
much "misleading information" coming out of every
major investment banking firm on Wall Street, regulators would have
to prosecute so many of them our economic financial system would
be in ruin! The sad facts ladies and gentlemen is that there was
so much widespread corruption and misleading information coming
out of these firms the regulators could only gather them in one
room and say, "hey, cut that out!" (The monster just smiled
and said, "Sorry! Here's quarter for some candy, now go away.")
Meanwhile, back
in Albany NY, the lawyers sat back in their chairs whyling away
their billable hours, the investment bankers sat stone faced and
wouldn't admit or deny anything, while law clerks shuffled reams
of paper back and forth. Regulators on one side, the guilty and
counsel (which ever one that is) sat on the other. Amounts were
discussed based on what they could afford for their size of operation.
(sounds more like the mob cutting up the bootlegging territory in
Chicago back in the 30's) Meanwhile, expensive suits were getting
wrinkled as they peered down at their gold Rolex watches and worried
about the traffic as they all thought of leaving. Was the matter
resolved? Not likely! Is the problem over, can we trust Wall Street's
finest once again? Not likely! In fact, in the face of all those
meetings the practice continued. The monster still lives...
From the
first part of this editorial came the following:
In an article
recently published by Axcess Business News, "Green
or Mean Returns - Investing in the Environment",alert
financial columnist, Freddie Mooche, uncovered errors
in Market Guide's Waste Management Services Fundamentals
on a NJ recycling company's (OTCBB: KBFP) numbers that purport to
have been updated by Market Watch Nov 17 when in fact KBF
Pollution Management, Inc. had disclosed its Sept 30 figures in
its 10-Q filing and announced 50% increases in sales for the period
in a Nov
14 release, supporting Ms. Mooche's claim of error on
the part of Market Watch. Mistake? How could they not have the
latest 10-Q figures if they updated their Report on Nov 17th?
Market
Guide's figures were made available through Charles
Schwab's web site. Schwab is one of the nations largest discount
brokers where millions of Americans go online to trade and they
rely heavily on the information found there.
Few American's
are aware of Schwab's trading practices either. Schwab can usually
be found in most penny stocks (Worldcom included) as a market maker
and their firm is rumored to be quite ruthless in its trading tactics
towards these smaller companies. If those rumors are true, its firms
like Schwab that force many penny stocks' executives to switch exchanges.
Axcess Business News recently interviewed
the CFO of Greenman Technologies, Inc (AMEX: GRN), one of those
companies that made the switch to the Amex over concerns for shareholder
liquidity. (Schwab was not mentioned in that article)
Schwab Tells
All
Was Schwab at
that meeting in Albany? No. Were fines levied against Schwab for
giving investors misleading information? No.

I interviewed a Schwab representative at their Reno Nevada office,
promising to keep her identity confidential if she'd answer my query
on Schwab's involvment. "Schwab was not at the meeting in Albany
NY, we were not fined for giving misleading information to investors!"
she said.

I pointed out to her that Schwab had provided Market Watch's financial
information on KBFP and that it was clearly wrong. She said that
she knew nothing about that but admitted that her firm did make
markets in lots of stock and KBFP could be one of them, she'd have
to check. Meyer Schwitzer is their trading arm in OTC stocks in
NY and yes they do make markets in penny stocks, she went on to
say. "They're a very reputable arm of the Schwab family,"
she pointed out.

I asked who else Schwab got information from that they give to investors.
"We work with Morgan Stanley and Goldman Sachs a lot and yes,
Market Watch is one of our resources as well." Both
Morgan Stanley and Goldman Sachs were in Albany and yes, they're
paying fines. But not Charles Schwab!

Schwab is still doing the same thing, even if it is indirect and
making a bundle at it too! Go online if you have a Schwab
account and put in an order for $100 of stock. Make sure its a penny
stock! Now call up a broker at a local firm, buy $100 of the same
stock. See which one gets you the best price. If you want to bet
me, my money's not going to be on Schwab. Why? The spread.
Penny stocks, like KBFP, usually trade on the OTC Bulletin Board
where market makers do not have to make realistic bid and ask quotes
and they don't have to report their short positions every 30 days
either! So when you try to buy a stock trading at $0.05 bid and
$0.075 ask, your going to pay the ask while the trading desk shorts
it to retail (the broker) and keeps the spread. Not a bad racket
to be in is it? And just think! Firm's like Schwab can also offer
you online research, like the kind offered up on KBFP by Market
Watch. Beginning to see who the monsters are now?
Let's not single
out Schwab, even though they're such an easy target for this editorial.-:)
In the age of the Internet where information abounds at the touch
of a computer key, plenty of prying hands have been over that data
you find on the net. They can spin it or slightly miscalculate it,
so as to present an astute picture of the facts. In reality while
the Internet offers many advantages it also can be used to present
misleading information. Finding the culprit behind those actions
often proves difficult. Especially for regulators who have so much
ground to cover they can't possibly see all of it. God bless
you all and good luck trading!
PS - I've left
some of the links in Part I of my
last commentary, in case you missed reading it!
Links to
Internet Stock Fraud:
From
Wall Street to Web Street:
Online brokerage industry report on the problems and promise of
the online brokerage industry; office of the New York Attorney General
Eliot Spitzer.
Project
Penny:
Grass roots organization attempting to reform penny stock rules.
Founded by Ian Park. Mr. Park is what reform is all about. We need
more people like him who'll stand up to Wall Street and Washington.
I urge you to click on his link and join his grass roots campaign
to reform penny stock rules! I gave him three rabbits, our highest
relevant rating for a link!
Ohio
Man Gets 7 Years in Stock Scam
A stockbroker who admitted bilking clients out of more than $50
million by shifting funds and sending out false account statements
was sentenced Thursday to seven years in prison.
800America
Sued for Fraud, CEO Arrested
The CEO of online retailer 800America.com Inc. (OTCBB:ACCO) was
arrested on Wednesday on charges he allegedly ran a massive scheme
to defraud investors, just hours after the Securities and Exchange
Commission sued the firm for allegedly falsifying revenues.
Analyst
Jack Grubman Admits Making Up Story For CitiGroup
Grubman said the story, sent by him in e-mail memos to another analyst,
was just baseless boasting on his part. "I invented a story
about ratings of AT&T stock to help my boss win a power struggle
at Citigroup Inc," he said in a statement.
We'll be giving
our readers more articles on fraud. Next Inside Commentary - watch
for what I think about credit card lenders and how they're shafting
consumers, side by side with the companies you know (Best Buy, Household
Finance and yes, there is a grass roots organization I'll be mentioning
in there too) Watch your in-box for your weekly Axcess Business
News Alert. If your not a subscriber to Axcess Business News,
please join now. Members get news
on companies whose stocks we follow and exclusive interviews with
those companies executives plus late breaking articles and our own
stock picks. Not to mention reading about what I think. It's all
free when you join!
Back
to Small Cap Stocks >>
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us your feedback on this Story
Disclaimer
The views or opinions contained Inside Commentary are those of the
editor and are not necessarily the views or opinions of Axcess Business
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directly or indirectly, in any manner. Inside Commentary is purely
an editorial presentation of our editor on subjects of interest
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direct them to editor (at) theaxcess.net.
See also:
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