The big brokerage firms are laughing at you.
Our avid readers are already aware that we are very upset about the “slap on the wrist” penalties levied against the big investment firms. These “white-shoe con-artists” have fleeced Americans for billions upon billions of dollars while their penalty was nothing more than the equivalent of a parking ticket. The $1.5 billion fine that all of these firms are splitting amounts to nothing. Literally!
The reason: Most of the payments are going to be tax-deductible while insurance companies could cover the rest. $1 billion of the fine is not characterized as a penalty or fine so it is a tax deduction for the crooks on Wall Street. In essence, we the taxpayers are funding the settlement.
Now for the rest!
The $500 million that is left over plus all the individual suits are being pushed onto the firms insurance companies. Given the sheer magnitude of the settlement plus all the individual lawsuits, professional liability insurance is going to go through the roof.
We were not the only ones critical of this ridiculous settlement. Three U.S. senators: Charles Grassley (R., Iowa), Max Baucus (D., Montana), John McCain (R., Arizona), have been outspoken as well. They too, have scathingly criticized the tax-favored settlements, as well as the ability for the firms to pass costs down to the insurers.
“This is unacceptable. Congress has pressed hard for real change at the SEC and in the boardroom. We are not interested in settlements that look good in the newspaper headlines but fail to bring real accountability.”
We are proud to be the only financial publication that has warned everyone about the big investment houses and their double-dealing since 1996. This type of conduct is nothing new. Wall Street will spend a fortune in the coming months to portray itself as an investor advocate. Remember folks: Scam me once, shame on you…Scam me twice, shame on me! The bottom line is that white-collar crime on Wall Street does pay.