First of all, Philip Berber and Leslie Moor were never licensed as stock brokers, not in any of the 50 states where they did business, not by NASD, not by SEC. Major problem there and they know it.
Second, I found those posts quite a while ago, thousands of them, before SI had the advanced search features it does now, wish I had them then because would have saved me hundreds of hours of work. Berber did not only post in his own name; he also posted through multiple aliases here, posing as satisfied clients and successful traders. One of those so-called "traders" claimed that trading 68 roundtrips a day, for 1/8's and 1/4's during 1999 when stocks were rocketing several hundred percent intraday was a suitable strategy. At the same time he claimed that 4,000 day traders were all very profitable, which is completely false.
Now, "referral fees." It is illegal for a broker to pay ANYONE and/or ANY COMPANY these kinds of fees unless the recipient is also duly licensed. TP and the IA's never were licensed. Second, these "referral fees," which were far more than that, in fact kickbacks based on the volume of commissions the TP recommendations generated, must be disclosed. If not, then that's clear fraud. For example, discount brokers disclose payment-for-order-flow. Many ethical people believe these payments should be barred, but OK they are legal - and they only are because they are DISCLOSED, investors know about them, and can decide for themselves whether or not they should open accounts with firms that engage in order flow payments. Berber et al never disclosed these arrangements, in fact his marketing strategy was based on attacking order flow arrangements and falsely claiming here in public that he never engaged in these kinds of arrangements, when in fact he took order flow to new heights, completely corrupting the IA's all over the country. He followed that up by lying about them in federal court a year ago. Berber himself knows very well they were illegal.
If he now turns around and finally admits they existed and were legal then for starters he's going to have to admit why he lied in a federal court, Moor, Rea and TP as well, multiple times. We spoke of credibility here. First you deny the kickbacks vociferously, hoping you've managed to successfully destroy all the evidence; then you fail so you admit them and say they were legal. They can continue to deny, in which case they'll be proved and then that's it; or, they can finally admit and then explain why they lied before, which indicates they had consciousness of guilt of criminal activity.
Moreover, the racketeering statute was enacted based on our antitrust laws, for example the Sherman Act, and before that the Lanham Act. Anti-competitive behavior through criminal activity is illegal. For example, in a recent federal court decision re RICO one company engaged in tax fraud and thereby gained an unfair advantage over a competitor, who could not match their pricing because they followed the tax laws, paid their taxes. The tax fraud co. did not directly damage the law-abiding co., indirect injuries caused, but the Court ruled that co. no. 2 suffered competitive injury through a pattern of racketeering perpetrated by company no. 1.
In my case the damages were directly caused, but maybe you see my point about the broad scope of the RICO Act. The point of RICO was to prohibit people using American commerce through a pattern of illegal activity to enrich themselves and/or to gain illegal advantage at the expense of others.
I doubt there would be anything wrong with a broker offering compensation to someone who provides them new clients. |
