I had interesting phone interview by Merrill Lynch survey
some younger woman called and asked for 6-8 minutes of time
I figured this would be rich, so agreed
many standard questions about discount broker usage, doing own research, risk tolerance, etc
then she finished with a question about interest in their research and full service brokerage services
I said "your research is often disguised as sales promotion to sell in distribution high volumes of shares which are held as Merrill treasury shares, bagging your profits, and unloading stocks on the unsuspecting public who are set to lose 10-20% over the following few months.... you deal with a blatant conflict of interest"
she denied it, but had no substance to her denial
so I challenged her on commissions, with
"why would I be interested in your services, which would mean I pay 10-20 times as much as my online broker for commissions"
she denied that as a silly exaggeration
so I challenged her with a posed sale
"suppose I sell 1000 shares of a stock at $20, what would my commissions be?"
she said 3-5%, which I translated quickly to be $600-1000
I told her my Ameritrade commish would be $11
with quick math, I said "so your commission is 50-100 times larger"
she had little to say in response
I was not done on conflict of interest, saying
"another conflict, ma'ame is your investment banking business... your analyst research recommendations are disguised, since they are largely followups on your stock issuance IPO's and secondaries... let me ask you a simple question... when have you recently heard any recommendation of a large or small precious metals mining firm stock?"
she said she had not heard of any such reco
I asked "why is it that you dont recommend any stocks in a sector whose major unhedged index is up over 400% since 2001?"
I asked if she has ever heard of any gold stock index, and she said no
I asked if anyone in her firm has ever talked to her about any gold stock index, and she said no
I asked why that is, since the HUI index is up over 400%
she had no answer
I told her it was because they did no investment banking with the mining sector
I concluded with wishing her luck, but urging her to keep her eyes open, since she has joined perhaps the most corrupt among financial sectors in the country
she said she hoped not
I reminded her that conflict of interest was riddled throughout her firm, right under her nose, and she seemed unaware of any of it
I pointed again to brokerage house treasury shares being sold and distributed, and to investment banking promotion
I wished her well, and said I will continue to do my own research, pay over 20 times lower commission, and avoid getting my ass reamed by her firm
she laughed hard, said it has been interesting, and signed off
I laughed harder, and said it is hard these days to earn a living and support a family, I just hope she didnt have to sell her entire soul
/ jim |
