Christopher MarkowskiArticle, Wall Street FraudLeave a Comment

Growing up in a small town in upstate New York we were lucky enough to have one of those small town weekly newspapers. We looked forward for the arrival of each week’s addition. I remember fondly, anxiously waiting to see if our athletic heroics of the past week were covered in that week’s addition. Maybe even a photo!

The sports page or the honor roll announcements were expected growing up. More recently… business articles and wedding announcements. In the Markowski household till this very day an article written about one of us in our home town paper means just as much as an article in a national magazine.

However, there is one part of the paper where one ever dared to be listed God— forbid the blotters and dockets!

Blotters and dockets is a list of the townsfolk that got themselves into trouble during the past week. That was not an section you wanted to be a part of. We were taught that by being amongst the troubled souls in blotters and dockets was a cause of shame and disrespect on yourself and your family. When one has been written up in blotters and dockets people lose their faith and trust in you. Faith and trust need to be earned, when they are lost it takes a great deal of time before it is restored.

Reading the business news in the Wall Street Journal, Forbes or Business Week over the past six months is reminiscent of the blotters and dockets of our small town paper. Corporations, brokerage firms, accountants, and analysts one after another getting themselves into serious trouble. They have tested the faith of the townsfolk of America.

In the words of my recently deceased and beloved Nanny (grandmother)…

“Shame, Shame, Shame on you!”

Shame on you Wall Street! The activities of Wall Streets “most respected” investment banks have been deplorable. We have been warning investors for years about the conduct of these large firms, however most of our evidence has been circumstantial. This past month the attorney general of New York has brought charges against Merrill Lynch for misconduct and plans to go after the rest of the lot including…

* Morgan Stanley Dean Witter

* Credit Suisse First Boston

* Bear Stearns

* Salomon Smith Barney

* Lazard Freres

* Goldman Sachs Group

* Lehman Brothers Holdings

* UBS PaineWebber

The following examples below, have been extracted from the attorney general’s official documents. Look at what they wrote in private (“in quotes”) vs. the official ratings they issued to you in public (IN CAPS).

Aether System (AETH): “… fundamentals [are] horrible.” Merrill’s official rating: NEUTRAL

Excite@home (ATHM): This company is “a piece of cr*p.” Merrill’s official rating: ACCUMULATE

InfoSpace (INSP): “This stock is a powder keg, given how aggressive we were on it earlier this year and given the ‘bad smell’ comments that so many institutions are bringing up.” Merrill’s official rating: BUY

Three months later: The stock is a “piece of junk.” Merrill’s official rating: BUY

Internet Capital Group Inc. (ICGE): The stock closed at $12.38, and Merrill analysts commented that it was “going to $5.” The next day, they wrote privately: “No hopeful news to relate…. We see nothing that will turn this around near term. The company needs to restructure its operations and raise additional cash, and until it does that, there is nothing positive to say.” Merrill’s official rating: ACCUMULATE!

Lifeminders (LFMN): Internally, Merrill’s analysts gave this stock the in-house rating of “POS,” which stands for “piece of s—.” Merrill’s official rating: ACCUMULATE.

24/7 Media (TFSM): Same situation: “POS” internally, ACCUMULATE, to the public.

In August of 2001 we told the public about the internal memo we uncovered at J.P. Morgan Chase where investment bankers were telling stock analysts that they were prohibited from making recommendation changes without checking with them first. That is a clear conflict of interest that breaks all securities laws. These are just some of the thousands of examples of fraud that has been waged against individual Americans.

I could a write an article longer than the United States tax code that could articulate the fraud that has been perpetrated on Americans. There is a crisis in capitalism due to the fact that is not being conducted as Adam Smith intended. Capitalism is not about how great a scam one party can pull over another. It is about two parties getting together and both leaving happy.

Investment banks, brokerage firms, accounting firms have taken advantage of the good nature of all Americans and it is just that they should pay the price. Only after being caught with their whole head in the cookie jar that they are all scrambling and screaming reform. The commercials they now run on television present themselves as soft, cuddly, always looking out for the individual. It is all a big fat lie. Everything they have done over the past 8 years has been to further their bottom line without any thought of the consequences. They could have cared less if they were lying and stealing from Americans as long as they were getting richer.

It is time for Americans to reclaim our system of capitalism for what it is supposed to be. Honest, respectable and profitable. We as Americans have power over these impertinent companies in how we go about doing our business. Change your accounts, don’t use their credit cards, and work with independent financial advisors. Make them suffer like they made Americans suffer. It is just penance and might make them think twice the next time before pulling off their next fraud on the American people. Then again, it might not!

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