Corporate crooks stealing your retirement (again) - Morgan Stanley

[WhoCountsTheVotes]

Front page of the WSJ today has a write-up of the latest corporate scandal - mutual funds have been letting their richest client trade off-hours and under special rules - meaning us, regular Americans with mutual funds in our 401k, are having our money stolen.

"New York, Massachusetts and the SEC have subpoenaed dozens of fund companies and hedge funds as part of an investigation into whether they allowed fund shares to be traded on special terms."

Morgan Stanley is being investigated for "alleged failure to propertly disclose" the fact that brokers were getting special commission to pimp certain investments (lipstick on the pig). It's been what? 4 straight years of these scandals now? How many millions of dollars from your average middle class Americans have been stolen?

"Allegations now reach the executive ranks of mutual fund companies" I'll bet $100 that not a single Morgan Stanley executive will spend a day in jail.

How are you all enjoying crony capitalism at it's finest? Next time some libertarian, Republican, or your average crony capitalism apologist tells you about the "hard work" that the rich have "earned" their fortune with, have a laugh at his expense. Chances are they aren't really a capitalist - they probably don't own any capital, but make their money from wages like the rest of us. Usually, what they are is a useful idiot. Send them here: http://nymrecords.com/

[Jack The Tab]

1. But don't you love the flood of new ads telling us how good it is now...

Urging us, pleading with us, to invest in the market again. I saw an ad on TV the other day saying something like "the time is right to get back into the market again"

I laughed when I saw this. It's the rich man's scam. I'm sure there are people who have made a considerable amount of money when Uncle Bill was in office, but now, I wouldn't spit on a stockbroker/trader if he was on fire.

[AP]

2. In America, if you steal money from enough people, and you take it from

their stock accoutns, convincing people it wasn't real money, it isn't a crime.

It's like when REpublicans stole from people's S&L's -- if it's insured, and even though you'll pay for it again in regressively accumulated taxes, it isn't really theft.

And when real estate prices crash and the banks retain all the interest you paid on your mortgage AND they own your house, nobody's going to think of that as theft either, I bet.

[WhoCountsTheVotes]

13. just the amount of money is astounding isn't it?

If you add up the S&L scam with the last few years of Enron, Worldcom, and now the mutual funds, it's staggering. It's a huge transfer of wealth from the middle class to the rich - and no one goes to jail either.

[Starpass]

3. Stupid Americans cannot tell the difference between

the Great God Capitalism and criminality that in another era would have had the horse thief hung. They cannot understand that capitalism has to be based on a certain trust that things are above board otherwise people won't invest their money...they'll put it in the shoe box!! Without that capital investment the very businesses that these bastards make big bucks on will collapse; not to mention that our foreign friends who are heavily invested here will kiss us goodbye as too much of a risk. The dumb bastards of America cannot get it through their heads that just like any other crime, if these crimes keep being winked at they will finally destroy the whole economic system. Americans someday are going to pay with everything they have for their goddamn ignorance of which they are so goddamn proud!!!!!!!

[truebrit71]

4. Please explain how this activity is "stealing from average Americans"...

I believe that your outrage is misguided but I want to know your premise first...

[AP]

5. The system is rigged.

It uses the money of the masses to guarantee the profits fo the few.

It makes the average person assume all the risk.

The profit these people make in a rigged system doesn't come out of thin air. It's profit that should have flowed broadly.

However, a few dollars from millions of people, they think it's OK. It isn't. It's still theft. Just because their socializing the theft so broadly doesn't make it right.

[truebrit71]

7. Yes and No...

1) Not so.
2) Not so.
3) Sorry but the profit does come out of thin air. The whole point of the stock market is the illusion that's it's real. On any given day whether a stock goes up or down it's the perceived direction of the company that governs the movement of the stock.
4) I do not agree with the concept that it's theft. You have to HAVE something in order for someone to thieve it from you. Un-realized, POTENTIAL profits do not qualify as REAL.

[WhoCountsTheVotes]

8. "Un-realized, POTENTIAL profits do not qualify as REAL"

I assume that you believe that copying music and sharing with your friends is not theft, and replanting Monsanto's patented seeds is not theft right?

[AP]

9. Those profits are very real for the insiders who got them.

They should have an incentive (from the law) to create profits for the people to whom they have fiduciary duties, and not to themselves.

[camero]

15. Um, hello

You buy shares with REAL money. Look at how much came out of your paycheck from your 401(k). You also lose REAL money when that stock tanks.

[WhoCountsTheVotes]

16. to most of us, it's real money, and a lot of money

I know too many friends that have lost their retirement due to these crooks, and I know a bunch of former Worldcom employees too (all of which had worked for other companies that were bought).

The cavalier, libertarian, pro-corporate, free markeeter, crony capitalist attitude drives me to distraction!

[WhoCountsTheVotes]

6. What would you call it?

You and I have investments in a mutual fund. Something happens that will likely make the price go down. You get special treatment, and get to sell out first, off hours. I lose money, and you don't.

How about having analysts lie about the prospect of a company in order to sell it to me? That's fraud, and theft.

Not to mention when these financial companies are in trouble, the Fed will step in to provide them with liquidity. Does the Fed do that for me when my investments go down? Nope. What happens when Morgan Stanley invests in Mexico, and Mexico can't pay the bills? Our tax money is spent to make sure Mexico can pay back Morgan Stanley (three times in my life so far).

If that's not theft, what is it?

[truebrit71]

10. You do understand how mutual funds work right?

They are not subject to the same volatility as individual stocks by their very nature. A mutual fund holds shares of stock in hundreds and hundreds of different companies. The price of the mutual fund is based on the overall price of ALL of those shares. Unless the mutual fund is HIGHLY specialized the liklihood of a huge price fluctuation is not very high. Because of this incremental price movement the only way that market-timing is beneficial is by purchasing HUGE amounts of shares, millions and millions of dollars worth. Much, much more than typical investors can/would be able to do. These guys already get huge breaks in loads anyway because of the size of their trades, just look at any mutual fund prospectus and figure it out.

The after-market aspect is absolutely illegal, and those that engaged in that conduct will get punished. But I am less pissed off at a bunch of over-ambitious mutual fund managers than I am at the scumbags at Enron and Worldcom who KNEW they were driving the company into the dirt and bailed just before it burst...THOSE are the guys you should be pissed at..

Your second point is accurate but not relevant to mutual funds.

Your third scenario is simply a fact of failed economic policy.

[WhoCountsTheVotes]

11. the profits are privatized, and the risks are socialized

Yes, I understand how mutual funds work. Please don't forget that all mutual funds are not stock funds either. Mutual funds ARE subject to volatility, and giving preferential treatment to some investors so they can mitigate their risk can make me lose money. It's illegal, and it's theft. It's also a derelicition of fiduciary duty to me.

[AP]

14. Exactly.

Just like CA taxpayers having to pay people for homes that were lost in fires in areas where private insurance companies refused to insure them because they KNEW they'd burn down sooner rather than later.

Socializing the risks/costs, and privatizing the gains for property developers who get to build and sell million dollar homes in areas where land is cheap and no houses should be built.

[Jose Diablo]

12. Pump and dump

I wonder when money that comes from employer to the Mutual Fund is actually invested.

Could there be a way to take advantage of the timing if you knew when the trades would occure?

There is a tremendous amount of money invested by these 401K funds, each month.

[WhoCountsTheVotes]

17. The "Greater Fool" Theory

A stock is worth as much as you can sell it to a greater fool than yourself. Or something like that.