Weil on Finance: Is Your Broker a Criminal?
Welcome back, View fans. Here's a look at what I've been reading this morning.
How well do you really know your stockbroker ?
The Wall Street Journal committed some real journalism today, spotlighting widespread omissions in the background histories for stockbrokers posted on the Financial Industry Regulatory Authority's website. Here are the opening lines from the article by Jean Eaglesham and Rob Barry: "In less than two years, stockbroker Marcos D. Leiva racked up a personal bankruptcy, a tax lien, a court judgment for unpaid debt and a criminal guilty plea relating to a false report to law enforcement. Each should have been promptly disclosed to investors. None was. Mr. Leiva is one of more than 1,600 stockbrokers whose records failed to disclose bankruptcy filings, criminal charges or other red flags in violation of regulations, without regulators noticing, according to a Wall Street Journal analysis." Great digging.
Big banks are really good at harassing regulators .
Read about it here in Jesse Eisinger's latest ProPublica column. This one is about how the banking lobby is crying bloody murder that some rules under the Dodd-Frank Act could cause a panic in the market for collateralized loan obligations. But this hardly seems likely. The banks just don't like the rules. And here's his larger point: "Reforming the banking system is a fight that will never end. Banks and their political allies fought financial reform before it was passed. To paraphrase a famous orator: They shall fight it in the courts, they shall fight it with the regulators, they shall fight it in the halls of Congress. They will search ceaselessly vulnerabilities and loopholes. They will sow doubt about the rules."
Ben Bernanke is no Harry Truman when it comes to speaking fees.
"I could never lend myself to any transaction, however respectable," former President Truman wrote after he left the White House, "that would commercialize on the prestige and dignity of the office of the presidency." How quaint, huh? Bernanke, the recently departed Federal Reserve chairman, was paid $250,000 for a 40-minute speech this week in Abu Dhabi, according to Reuters.
Will analysts ever stop predicting when the next "Bear Stearns moment" or "Lehman moment" will come?
If and when such moments eventually come, we'll probably coin different nicknames for them, because they'll play out in their own unique ways. But until then, I guess the simple answer is no, the predictions won't stop. The latest example comes from three Hong Kong-based strategists for Bank of America who say the growing risk of default by Shanghai Chaori Solar Energy Science & Technology Co. may become China's "Bear Stearns moment." And it will be worth watching to see the aftermath of a bond default in China, because such things just don't happen, although maybe this time one will be deemed permissible by the Chinese government.
Mathew Martoma made a really horrible trade .
The former SAC Capital trader could have skipped a trial, pleaded guilty to insider-trading and gotten a lesser sentence than he will now. And he also could have kept his MBA degree from Stanford. But now he has lost that, because some awful stuff came out during the proceedings that showed he never should have been allowed to get into Stanford's MBA program in the first place. So now Stanford has decided that he doesn't have a degree from its fine MBA program anymore. Not that a Stanford MBA degree would do him much good where he's going.
Do you not give your dog a funny tattoo while he's sedated at the vet and then post pictures of it on Instagram, or else animal-rights activists may get mad and call you bad things on the Internet.
Thank goodness we have the Daily Mail to teach us these important life lessons.
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter at @JonathanWeil.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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