122804 – Pre - THE CONCLUSION –
Vote of No Confidence –year end review
We end the year on the same cynical note we began and as everyone of those gurus/sages tell us what they ‘think they see’ for 2005, know well they were not able to think or ‘thought’ see or saw at the beginning of 2004, no less others thinking they thought as far as 2006.
As you review the list below of SEC/NASD actions, no tears are necessary, it’s a learning curve, just so long as you investors don’t make the same choice mistake twice. You can trust your family doctor or lawyer even your accountant, just not your broker who supposedly now is shielded and protected because he is not your family 'financial advisor' an execution, you have been executed. Broker, yes you are all the poorer.
Heck, they weren’t able to see from Black Friday to the following Wednesday about retail stocks nor have they figured out the interest rate environment now that they are convinced interest rates are headed to the moon, but can’t explain why prices continue to rise. And the sectors that at the beginning of last year they vehemently told all investors to avoid, i.e. tech, Small Caps (crap –their words) and interest rate sensitive/dividend paying stocks, somehow turned out to be the best performers of the year.
They’re (pros’) are almost of one mind again about inflation but can’t explain why gold is at this level yet the XAU (Philly Gold/Silver Index) is reflecting lower prices for mining shares and the biggest conundrum to all of the pros who transverse these markets in a (Hercule effort to disguise) moving the averages but not stocks, is why they can’t raise any new money to buy themselves a second pair of pants to go along with that worn out suit jacket particularly when there are trillions waiting on the sideline and refuses to come into this market regardless of how high the indexes have run, yet stocks have barely moved.
And when it comes to persons’ investments, all those investors who had to own every stock for the long haul at the top of 2000 are about to head into the 5th year of the ongoing bear market and somehow are not even back to breakeven under that fabulous strategy known as dollar cost averaging. Yup, all the experts are of one mind and as we have always said there isn’t a beam of sunlight that separates any of the proclaimed independent research/fined firms and it will not be any different next year. Because when everyone thinks alike, no one is thinking.
And as the stock experts continue to warn about a housing bubble, they somehow completely missed the tech bubble and totally ignore that there is a comfort level where persons would prefer to spend their hard earned money to improve their own living standards and will trust their own judgments, having no confidence vote in any other venue they do not directly control. They have finally have come to recognize that stock analysts are really anal-sts.
And truth be told, while everyone including the investor has seen to accept the trillions of dollars lost without putting up much of an argument, knowing that all those Class Action suits have reaped no rewards for them, they will be prudent with their own monies this time around and enhance their homes and personal properties with real tangible items, not some fiat stock certificate.
We end this year with our last report that highlights the past year in our own way. Our postion remains in defiance of the experts, gurus, soothsayers and glad handlers whose opinions and suggestions forever change only to be on the side of winners. That term is reserved for them since anyone taking their advice is forever a loser. Even when they have the benefit of hindsight they still get it wrong, hence anal-sts still cannot see from their own butts!
Let’s start with our Congress, where the gaggle of worthless after the fact crisis talking heads are forever calling for investigations to see why something went astray but never assume their own responsibilities; in fact, they do oversee everything via subcommittees and could have interceded on a timely basis to halt issues before they went terrible wrong.
Blame is assessed to others as these Law Makers get to write ever more laws (topping 80,000) on the books that are so cumbersome, they themselves have no sense of what is or is not law.
Take for example their latest venture...That is to redact and make it ever more difficult for private citizens to register under bankruptcy code Chapter 7. The thrust of the argument is that it is too easy for citizens to seek court protection, wipe out their debt, retain some of their basic few assets and attempt to move on over the next many years to rebuild their lives. Yet corporations cannot only seek other multi alternative declarations of bankruptcy, but can do so almost twice in the same year if they see fit.
Count how many times FAO Schwartz
or K-Mart moved through the courts was
lightening speed and reemerged not only clean but went on to be able to acquire
Sears and start their corporate lives over again as was WorldCom able to reemerge under the guise of MCI. Here, the largest default corporation in
American history came through unscathed. Yet shareholders are always
left with no equity, that is not even par value for their stocks.
And while our do-nothing Congress had to revisit the courts three times to get the Do Not Call List made lawful, creditors still have ways of pursuing citizens for the $3000 they owe on some credit card.
But in the corporate hierarchy, even where CEOs are found to have manipulated their company’s stock price (not for the benefit of shareholders) but to insure their own salaries and annual perks, even when CEOs are forced out for irregularities and assuming they get caught, they leave with dental plans on through to hundreds of thousands of stock options and bloated pensions. The same guy who said after the ENRON collapse better laws need to be enforced…
"Raines
will live quite handsomely off Fannie Mae's shareholders for the rest of his
life," says Greg Taxin, CEO of research firm
Glass Lewis, who estimates Raines' payout at $25 million. Raines and Howard
were forced out at the nation's largest mortgage lender on Dec. 21 after
regulators found accounting problems that could cause Fannie to take a $9
billion charge against earnings.
Now,
regulators are promising to take a close look for excesses.
"We will be reviewing their termination packages," says Corinne
Russell, spokeswoman for the Office of Federal Housing Enterprise Oversight
(OFHEO), which must approve the payouts. "Should it be determined that
they were unjustly enriched, we have enforcement tools at our disposal to seek
recovery."
Payouts
detailed in the Securities and Exchange Commission filing include:
** Pension.
Raines and his wife will be paid $114,393 a month as long as they live. Howard
will receive $36,071 a month, totaling $432,852 a year, in the same program.
** ·Stock
options. Raines holds vested stock options worth roughly $5.7 million. Howard's
vested stock options are currently worth roughly $4.4 million.
* * ·Stock
bonuses. Raines was granted awards, payable in stock, for reaching performance
goals. Under the program, he got 69,577 shares — half of what Fannie determined
he should receive — in January. At Monday's close, the shares are worth $4.9
million. It is unclear if he will receive the rest. Howard got 24,300 shares
under the program, also half of his allotment, now worth $1.7 million.
** Deferred
pay. For tax planning while employed by the company, Raines and Howard were
allowed to put off the receipt of payment. These deferred past payments total
$8.7 million for Raines and $4 million for Howard.
** Future
salary. Howard will be paid his salary through June 20, 2007, under this
arrangement. That would amount to $1.7 million if requirements are met.
Although Fannie says Raines' retirement was effective Dec. 21, he is seeking to
have it effective as of June 22, 2005, and receive $600,000 more in pay.
A fight with
regulators seems likely, since they might insist Raines and Howard are treated
as if they were fired, not retired, says Bert Ely, who advises financial
institutions. "OFHEO will want them to walk with as little as
possible."
The most recent is Franklin Raines, where Congress decided to ignore the issues for years, and argues today whether he was asked to leave or fired as the decision might affect his severance package. But this is not unique as Dick Grasso’s payment for service of nearly $180 million certainly managed to do fairly well considering he started as a mail boy and then getting kickbacks from listed companies while telling retail investors that he and the Exchange is on their side.
Certainly we can’t leave out the likes of Henry Blodget or Jack Grubman
who contributed to the trillions lost and managed to walk away with tens
of millions.
As for the media, namely CNBC, there’s nothing here that needs to be covered. There not even smart enough to understand why their demographic ratings keep sinking. We made the case against these lapdogs for the brokerage firms and have pointed out their own unique conflicts of interest as they cheerlead the fined firms and continue to assure what remaining viewers they have that they too are better prepared to give guidance, opinions with their new filtering/comparison tools and resume the role of Pied Pipers.
HAND IN GLOVE: As for Merrill, the below article speaks for itself but you will note they are conspicuous by the absence of their noble sounding commercials of late since Total Merrill was too easy to be picked apart by everyone as Total Merrill Destruction.
Wherever this Lynch-Mob of advisors suggested, markets ran in the opposite direction as still one of the best contrary tools out there. And remember, all those Dot.CoN recommendations were pure crap calls (via internal memo) so brokers could hype them and get commissions and investors are the real villains for trusting your advice?
Take note that MER is making
available their in-house phones over the holidays for senior citizens (the
fastest group now seeking bankruptcy protection) a 180 degree reversal
from just a few years ago, as they bought all those InterNots
for their grandchildren and today can’t afford a phone, but MER is providing usage at their locations. So
charitable of them.
Merrill
Lynch is often called Mother Merrill on Wall Street, denoting
the prowess and the clout the institution still holds. But some are seeing an
institution that is sputtering, as its stock performance has slipped over the
last few quarters amid what has been a relatively good economy. What has
happened to mighty Mother Merrill?
Investment
banking, which accounts for a large portion of Merrill's revenue, has not been
the source of income that it has in the past. Merrill notably departed from the
Google IPO, which to its credit, ended up being reprised. IPOs are not
the only thing the bankers at Merrill have missed out on: there have also been
very few secondary offerings and not that many high profile acquisitions.
Another reason
for the lackluster performance is that there are some pretty high expectations
built into the stock. These expectations were driven by the large cost cutting
efforts over recent years. These cost cuts include a large decrease in
investment banking staff and cuts in the retail brokerage operations.
In addition,
the Elliot Spitzer crusade may not yet be over, and Merrill and other brokers
may still face regulatory issues and future class action lawsuits. The SEC is
also investigating the industry concerning brokers not getting the best price
for customers. These are certainly the type of concerns that would lead risk
adverse money managers to avoid the stock on fears of a big blow up. It also
serves to keep out the aggressive money managers, as they believe the stock is
probably going to trade in a tight range over the next few months until these
issues are resolved.
Either way, it's a tough call to make at this point, as expectations for next year being an average year for investment banking and slightly above average for the money management side of the business don't make the decision any easier. **
As we conclude this report and
the year, we reserve extended comments (again) for future reports taking a well
earned respite and simply say, that those/ firms who brought about all the
destruction are homemade terrorists to all investors save none; those champions of wealth obliteration
may wish to just move on and sweep under the rug is the trillions lost forever,
but that bulge under the rug is the lives, hopes and dreams along with
savings accounts, college tuitions and leave not for last, most folks
retirement accounts. So goes the American dream into the endless nightmare.
they earned
every penny of your dollars, not from due diligence but stealing INVESTORS money:
The year-end bonus is a Wall Street tradition, and for a second consecutive year, the amounts are significant. Three major Wall Street firms - Goldman Sachs, Lehman Brothers and Bear Stearns - have reported record profits for the year and all are said to have given out handsome bonuses.
The totals in 2003 were already impressive: Lloyd S. Blankfein, the president and chief operating officer of Goldman Sachs made $20.1 million, of that only $600,000 was salary; and E. Stanley O'Neal, the chief executive of Merrill Lynch, received a bonus of $13.5 million and restricted stock worth $11.2 million on top of his $500,000 salary. At the other end of the compensation spectrum, an investment-banking analyst right out of college would have made a $65,000 salary and a $35,000 bonus last year. An associate just out of business school might make $85,000 in salary and an $115,000 bonus.
This year, investment bankers are expected to see gains in bonuses of 10 to 15 percent, amid a year-end flurry of mergers. Fixed-income traders, who have been the best-compensated Wall Street professionals in recent years, will also be amply rewarded, but their percentage gains may be smaller than those of bankers. Bonuses, of course, vary by bank, by division and by individual. They reflect the firm's profitability and the group's performance, as well as the individual's contribution.
This year's bonuses do not quite reach the heights touched by star bankers and traders in the heyday of the late 1990's technology bubble. But they are rich enough to persuade many of Wall Street's elite to rediscover conspicuous consumption. ***
On a condensed look-back we must
underscore once again, trust and confidence cannot be commanded but only
earned, and we say still, the only real bull market is from class actions and
legal suits arising from arbitrations cases. So as the experts tell everyone
what to watch out for in 2005, we can only strongly make the admonition case to
watch out for the experts and firms.
2004 News Releases SEC-NASD
12/22/04 Edward Jones to Pay $75
Million to Settle Revenue Sharing Charges
12/21/04 NASD Fines H&R Block
Financial Advisors $500,000 for Enabling Deceptive Market Timing, Orders
Payment of $325,000 in Restitution
12/16/04 SEC, NASD Sanction Knight
Securities $79 Million for Fraudulent Sales to Institutional Customers
12/15/04 NASD Orders First Command To
Pay $12 Million for Misleading Statements in Sales of Systematic Investment
Plans to Military Personnel
12/15/04 NASD Issues Warning on
Systematic Investment Plans
12/9/04 NASD Fines Sigma Financial For
Suing Customers In Violation OF NASD'S Arbitration Code
12/8/04 NASD Alerts Firms About
Liquified Home Equity Concerns
12/7/04 NASD Fines Citigroup Global
Markets $275,000, Orders Restitution Relating To Managed Futures Sales
12/7/04 NASD Bars Broker For Charging
Fraudulent Mark-Ups
12/6/04 NASD Fines Morgan Stanley $100,000
For Municipal Bond Disclosure Violations
11/30/04 NASD Fines 29 Firms Over $9.2
Million for Late Reporting
11/29/04 NASD Bars Former AmSouth
Broker for Fraud in the Sale of Variable Annuities
11/22/04 NASD Permanently Bars Frank
Quattrone from the Securities Industry for Refusal to Testify in NASD
Investigation
11/17/04 NASD Mutual Fund Task Force
Submits Recommendations on Soft Dollars, Portfolio Transaction Costs To SEC
11/17/04 NASD Names Top Officials For
New Florida District Office
11/11/04 NASD Seeks Comment on
Possible Fairness Opinion Rule
11/8/04 NASD Charges H&R Block
Financial Advisors With Fraud In Sale Of Enron Bonds To Hundreds Of Customers
11/5/04 NASD Charges Park Capital,
It’s Owners, 10 others With Manipulation, Fraud In Sale Of Unregistered Stock
10/25/04 NASD Fines Citigroup Global
Markets, Inc. $250,000 In Largest Hedge Fund Sales Sanction To Date
10/7/04 NASD Fines Sentinel Financial
Services $700,000 for Failing to Prevent Market Timing
10/6/04 NASD Charges David Lerner
Associates With Using Misleading Radio Spots, Investment Seminars, Other Ads
10/4/04 NASD Sanctions 18 Firms for
Order Audit Trail (OATS) Reporting and Supervision Violations
10/1/04 NASD Hearing Panel Dismisses
Complaint Against Win Capital, Two Officers
9/30/04 NASD Bond Panel Urges Fuller
Information, Access to Corporate Bond Market for Retail Investors
9/23/04 SEC Approves NASD Rule On
Designating CCOs, CEO Certification Of Compliance Processes
9/22/04 NASD to Open New District
Office in Boca Raton, Fl
9/13/04 NASD Issues Investor Alert on
529 College Savings Plans
9/2/04 NASD Investor Alert: Protecting
Against Online Identity Theft
8/31/04 NASD Granted First Temporary
Cease and Desist Order to Stop Ongoing Fraud by Brokerage LH Ross
8/24/04 NASD Given New Authority to
Discipline Former Brokers Who Fail to Pay Arbitration Awards, Settlements
8/19/04 NASD Orders First-Ever
Suspension of Mutual Fund Business and $600,000 In Sanctions Against National
Securities Corp. for Deceptive Market Timing Practices
8/6/04 NASD Hearing Panel Dismisses
Complaint Against Peter R. Kellogg
8/5/04 NASD Dispute Resolution
Launches Online Arbitration Claim Filing And Notification System
7/29/04 NASD Fines Morgan Stanley $2.2
Million for Late Reporting, Firm Temporarily Suspended from Registering New
Brokers
7/28/04 Goldman Sachs, Deutsche Bank,
Miller Tabak Roberts, Citigroup Global Markets to Pay Total $20 Million for
Corporate High Yield Bond Trade Violations
7/27/04 NASD Uses Cease-And-Desist
Authority for First Time, Seeks Halt to Ongoing Fraud by Brokerage LH Ross
7/19/04 NASD Fines Citigroup, Merrill
Lynch and Morgan Stanley a Total of $750,000 for Failing to Comply with
Discovery Obligations In Arbitrations
7/14/04 NASD Charges Florida Discount
Securities with Fraud
7/12/04 NASD Fines Piper Jaffray $2.4
Million for IPO Spinning
7/8/04 NASD Bars Scott W. Ryan, Expels
Ryan & Company for Failure to Cooperate in Short Sale Probe
6/29/04 Eight Brokerage Firms Pay Over
$610,000 to Settle NASD Charges of Municipal Price Violations
6/25/04 SEC Approves NASD Arbitrator
Classification Rule Changes
6/24/04 NASD Fines Five Firms $625,000
for Supervisory System Failures Relating to Late Trading of Mutual Funds
6/18/04 NASD Implements Expedited
Dispute Resolution Proceedings for Elderly or Seriously Ill Parties
6/14/04 NASD Charges Investprivate,
Inc. and its Chairman with Fraudulently Raising Millions
6/9/04 SEC And NASD Release Joint
Staff Report On Broker-Dealer Sales Of Variable Insurance Products
6/7/04 NASD Expels Continental
Broker-Dealer Corp. for Sales Practice, Supervision Violations
6/1/04 NASD Fines Davenport & Co.
In First Case Of Deceptive Market Timing In Variable Annuities
5/27/04 NASD Names 20 To Mutual Fund
Task Force
5/26/04 NASD Increases Online Training
For Arbitrators
5/25/04 NASD Fines and Suspends Phua
Young, Former Merrill Lynch Research Analyst
5/20/04 NASD Disciplines Three Firms,
Three Brokers For Variable Annuity Abuses
5/18/04 NASD Sanctions Investment
Banks For IPO Violations
5/12/04 NASD Announces Mutual Fund
Task Force
5/4/04 NASD Investor Education
Foundation Announces Grant Guidelines, Solicits Project Applications
5/3/04 NASD Alerts Investors Of 100
Percent Mortgage Risks
5/3/04 NASD Charges Dallas, San Diego
Brokerage Firms With Fraudulent Promotion Of Pink Sheet Securities
4/28/04 NASD Files Enforcement Action
Against Sigma Financial For Harassing Clients, Violating Arbitration Code
4/26/04 NASD Proposes Specific
Requirements for Deferred Variable Annuity Sales
4/22/04 NASD Proposes Increasing Sale
Data On Corporate Bonds For Dissemination To Public Through TRACE
4/12/04 NASD Fines Long Island
Brokerage Firm David Lerner Assoc. $100,000 for Prohibited Mutual Fund and
Variable Product Sales Contests
4/7/04 NASD Fines Robertson Stephens
and Former VP $350,000 for Attempting to Coerce Investment Banking Fees; Also
Charges Former Managing Director
4/5/04 NASD Fines, Suspends Former SSB
Research Analyst Christine Gochuico For Misleading Reports On Winstar
3/31/04 NASD Dispute Resolution
Establishes New Hearing Location in Hartford, Connecticut
3/26/04 NASD Convenes Panel to Discuss
Challenges Facing Corporate Debt Market
3/18/04 Amex Seat-Holders and NASD
Approve Transfer of Amex from NASD back to the Exchange
3/15/04 NASD Charges Three Brokers
with Suitability Violations for Recommending Investment Purchases Using
Mortgage Proceeds
3/12/04 NASD Names Hans Reich Head of
its New York Region
3/11/04 NASD Fines Ameritrade, Datek
and clearing $10 Million For Improperly Extending Credit and Allowing Trades
That Avoided NASD Day Trading Margin Rules
3/8/04 NASD Charges Advantage Trading
Group, Inc. and its Trade Desk Manager with Creating False Trading Records to
Mislead Investigation
3/4/04 NASD Announces Rule Limiting Expungement
of Customer Dispute Information from the Central Registration Depository
2/26/04 NASD Fines AXA Advisors
$250,000 for Failure to Waive Sales Charges on Customers' Mutual Fund Transfers
2/19/04 NASD Fines State Street
Research Investment Services $1 Million for Market Timing Supervision
Violations; Firm Ordered to Pay More Than $500,000 in Restitution
2/12/04 Fifteen Firms to Pay Over
$21.5 Million in Penalties to Settle SEC and NASD Breakpoints Charges
2/2/04 NASD Fines CSFB $170,000;
Orders $600,000 in Restitution for Failure to Give Best Execution to Customer
Orders after IPO
1/29/04 NASD Fines Prudential $2
Million; Orders $9.5 Million to Customers for Annuity Sales in Violation of NY
Insurance Regs
1/16/04 NASD Hearing Panel Finds Former
Tech Banker Frank P. Quattrone Failed to Respond in NASD Investigation
1/16/04 Statement From NASD Executive
Vice President and Head of Enforcement Barry Goldsmith Regarding Quattrone
Decision
1/14/04 NASD Charges Waddell &
Reed with Suitability Violations Relating to Thousands of Variable Annuity
Exchanges and Seeks Customer Compensation; Two Senior Execs Also Charged
1/12/04 NASD Bars Louisiana Broker and
Orders Restitution for Unsuitable Sales of Variable Annuities and Mutual Funds
1/9/04 NASD Fines Worldco and Four of
Its Owners $1.5 Million for Co-Mingling Operations with a Hedge Fund; CEO
Barred, Three Others Suspended
Happy New Year and Happy trails to
the wrong doers. It will take a full generation before trust and interest
returns to the markets!
MBL 12.28.04 - Pre- ’04 Conclusion
9:26 AM
Document information property of MBL & Associates