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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (64367)	7/11/1999 1:40:00 AM
From: Skeeter Bug	Respond to of 132070

not yet. it will... but not yet.

To: Knighty Tin who wrote (64367)	7/11/1999 10:08:00 AM
From: Giordano Bruno	Read Replies (1) \| Respond to of 132070

Sweet Home Alabama July 11, 1999 MARKET WATCH On the Seamier Side of the Bull Market By GRETCHEN MORGENSON Another day, another $100 million lost by investors to securities fraud. An exaggeration, of course. But judging from the cases streaming out of prosecutors' offices recently, it seems as if securities fraud rivals the Internet as the nation's hottest growth industry. On Thursday, a small brokerage firm called A. S. Goldmen and 33 individuals associated with it were indicted on charges of securities fraud. Robert M. Morgenthau, the Manhattan District Attorney, said investors lost $100 million with the firm. Goldmen employees committed just about every bad act in the book, he said, including stock manipulation, lying to investors, unauthorized trading and forgery of documents. The lawyer for the firm's owners said they would be exonerated. The growth in securities cases has kept Morgenthau's office humming. In the past 18 months, he has brought nine cases against 94 individuals. Nor is the problem limited to New York. Investor inquiries and complaints to the Securities and Exchange Commission rose 11.6 percent last year. There's a simple reason for a bull market in fraud -- the bull market in stocks. Investors hearing of wondrous sums made in the market are eager to generate their own profits and easily gulled about what they can expect an investment to earn. When the Standard & Poor's 500 rises more than 20 percent for five consecutive years, it's easier to believe a crook's claim about doubling your money on a hot stock. Greed, of course, is at the bottom of these mishaps. But many crooks are so good at their craft that even a hardened skeptic might be convinced. Besides, who doesn't want to increase profits? Consider the story that Viva Wolhar, a teacher in Newark, Del., says she told the prosecutors. When an A. S. Goldmen broker called her in late 1997 with an investment idea, she thought it might bolster the $9,000 she had saved for her daughter's wedding and the $25,000 she had in a retirement account. "I was told they were going to build a golf stadium in Naples with the money and that they had the sanction of the senior tour," she recalled. "It seemed to make sense to me." She lost $33,761. Clearly, investors are vulnerable today. Which makes a proposal to reduce registration requirements for brokers -- made by the Securities Industry Association, Wall Street's lobbying group -- puzzling at best. Senator Phil Gramm, the Texas Republican who ischairman of the Banking Committee, is looking at whether to include it in his Securities Markets Enhancement Act of 1999. The proposal would change the current state-by-state registration system for stockbrokers, allowing a broker to operate nationwide as long as he or she was cleared in one state. Stuart Kaswell, general counsel of the industry group, said it would eliminate redundancy. But state securities regulators say it would encourage scofflaw brokers to set up operations in the state with the smallest regulatory staff and then make cold calls to investors across the country. Joseph P. Borg, director of the Alabama Securities Commission, said 75 percent of brokers registered in Alabama are from out of state. In the last 18 months, his staff questioned the applications of some 350 brokers; 300 of them withdrew. "Under this proposal, I'll have no gatekeeping function." he said.