Crooks and Nanny. The NYSE is at it again and its nanny, the SEC, seems unwilling or unable to kick ass. You remember – the NYSE is the firm that paid its former chairman and CEO, Richard Grasso, $139 (+) million for his superior leadership. Anyway, it now seems that fifteen NYSE specialists have been indicted for cheating customers and mishandling trades to enrich their firms (and therefore get bigger bonuses), this on the heels of a 1999 scandal when a ring of independent floor traders was found to be illegally involved in proprietary trading. Electronic trading, which the floor traders/specialists profusely and profanely oppose—gee, I wonder why—is long overdue.
Greenberg’s Fifth. In his meeting with Prince Eliot, deposed King Maurice of AIG land invoked his Fifth Amendment rights against self-incrimination dozens of times. Do innocent people invoke the Fifth?
Pray for Tom DeLay. Please __________ (fill in God, Allah, Buddha, etc., as required), save us from this modern-day Caligula; remind him and others of like view that this is the United States, not some third-world republic that will cow to the whims of a misguided would be dictator with a monotheist Christian God complex. Amen. P.S. Anything you can do to expedite our request would be appreciated.
Stough Stuffs Military Personnel. Texas-based broker Louis E. Stough advised military personnel to flip from one mutual fund to others with a 50% first year sales load (fee). Whoops! What he forgot to tell them was they could transfer to comparable funds that had no sales load. Stough was fined $25,000 and suspended for ten months (better keep an eye on him). First Command, his employer, was fined $12 million for misleading investors. (Better keep an eye on them too.) Naturally neither admitted nor denied wrongdoing. I guess the devil made them do it.
Plunder Down Under. Rodney Adler, former director of HIH Insurance, Australia’s biggest corporate failure, gets 4½ years in the slammer for offences that the judge said displayed an appalling lack of commercial morality. Glad to read they still have some of that Down Under. Note: HIH’s liquidator said he intends to claim that General Re contributed to HIH’s collapse. This is the same General Re that may have aided and abetted AIG’s profit manipulation, the same General Re that is owned by Berkshire Hathaway, the King of Clean, folksy Warren Buffet’s, vehicle. Mr. Buffet, what the hell is going on in Omaha?
Freddie Fraud? You may know Uncle Freddie as Freddie Mac the warm and cuddly dealer in billions and billions of mortgage money that is up to its assets in accounting scandals. Now a broker, to line his pockets with fees, has been peddling unqualified mortgages, the same ones multiple times it seems, to a National City (Cleveland-based bank) subsidiary, offering the bank undisclosed financial incentives. In turn, National City’s subsidiary illegally sold the mortgages to Freddie Mac. National City isn’t talking, yet. According to Uncle Freddie, the amount is an insignificant $178 million, but you stick enough $178 millions together and you soon have enough to hire a good CEO.
AAARRRRGGGGHHHH! Siebel’s Death-Wish? First J. Michael Lawrie, last year’s white knight, gets the big dirty boot all because of a little thing like first quarter earnings going in the toilet. No problem. Siebel goes out and hires a guy that led Webvan Group, a spectacular and expensive dot com fiasco, to the land of flushing waters. You think Siebel might have looked for someone who knows how to make a company profitable, not one who knows the road to bankruptcy, even without asking directions.
MTBE. Huh? Yeah, me too. Methyl Tertiary Butyl Ether, a gasoline additive that replaced lead, is rearing its own ugly head, seeping into and contaminating water systems. So who’s going to pay for the cleanup? Giant oil and chemical companies or you and me? Tom DeLay and friends are trying to shove through a waiver protecting giant oil and chemical from liability. On the other side, product liability lawyers are generating a lot of armpit sweat dreaming of hundreds of millions in contingency fees. Whatever happens, this is going to be interesting reading. If you care, read a lot and yank your senator’s chain.
Doc’s Performance Pay? Scene from a one-act play wherein Medicare tests a performance pay system. Medicare Dictator, sitting behind his oversized desk in his palatial office, asks “Tell me Dr. Smith, how have you earned your bonus this month?” Dr. Smith, dressed in a designer smock and reclining in an overstuffed chair across from Medical Dictator, says “I have kept twenty-seven patients out of the hospital, all of whom said they needed heart surgery.” Medicare Dictator laughs and says, “When will these people learn they can’t keep coming to us with every little medical problem? Good work, and because you saved us $3 million, I’m increasing your bonus to $300,000. If you do the same next month, I’ll double it.” Rising and extending his hand, Dr. Smith says, “Thank you. I can sure use the money what with both my kids in ivy-league medical schools.”