I beg all to read. It’s for your good and America’s.
I believe there are very serious legal, moral and ethical problems in the securities industry. In order to stop these activities, legislative reforms will be required. Below is a letter to Congress, and a link has been provided enabling you to locate and email your congressperson. Please copy and obviously feel free to make any changes. This is not spam; I am an individual investor just like you who is simply sick and tired of the Wall Street deceit. We need reforms. Thanks for the help.
Congressional email link:
house.gov
COPY BELOW THIS POINT.
I am writing to inform of my concerns about information disseminated to the small investor by Wall Street brokerage firms. During the recent congressional hearings, Wall Street firms proposed eliminating conflicts of interest, such as maintaining the Chinese wall between investment banking departments and analysts. There are existing securities laws prohibiting this practice. It was also proposed there be greater self and market monitoring but again, these laws and regulations already exist. Proposed changes have little substance. At this time the NASD is down 70% from its high, and during this decline, major firms on Wall Street issued 1-2% sell recommendations. This is an alarming statistic, indicating serious conflicts of interest and unethical business practices.
After the World Trade Center disaster, it was widely reported in the media that individuals should not sell or short stocks and mutual funds for “the good of America.” After the markets opened on September 17. 2001, most major indexes fell an additional 10% for the week. Wall Street players were aware of huge institutional sell order imbalances in the days before the markets reopened and undoubtedly used their media influence to manipulate the small investor to ultimately support the sales of large clients. Even after the congressional hearings, it appears Wall’s Street’s use of patriotism to manipulate the small investor suggests ethical and moral business practices are at an all time low, and it is still business as usual.
These recent and past events again highlight the need for significant changes in the objectivity of information provided to the media by Wall Street. Here are a few simple recommendations.
1. Analyst bonuses should be based on returns associated with recommendations, not investment banking fees, commissions, or any basis presenting a conflict of interest.
2. The industry should develop clear, concise and standard language for buy and sell recommendations.
3. Once a month, brokerage firms will submit to an independent government agency a report detailing changes in stock recommendations and the trading of that stock for the firm’s own account, large clients, and the analyst. The reports should detail trading one month prior to changes in recommendations and two months following the recommendation. Top firms should issue an aggregate report semi-annually with changes in recommendations of widely held issues during that period and the changes in the stock price. The report should also detail the firm’s market strategists’ recommended allocations and returns. The firm’s customers will be informed of the report publication and upon request distributed without charge. Reports will also be distributed to appropriate media outlets and government agencies.
4. Communication with the media must contain full disclosure of possible conflicts in interest associated with recommendations.
The American securities industry is the most heavily regulated industry in the world. Since current practices of market or self-monitoring are ineffective, the SEC or a new government agency should have a greater role in oversight and enforcement. The scope of the current laws and regulations should be broadened with significant financial penalties (triple damages) if found guilty. Mandatory prison sentencing should be applicable for a broader range of criminal violations as well as the expansion of current laws which bar firms and individuals from any future participation in the securities industry.
Thank you for you consideration, and it is my hope Congress will take steps to protect the individual investor from the unethical and illegal practices that appear commonplace on Wall Street. |
