Financial Shenanigans? by Malcolm Berko on Creators.com

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Financial Shenanigans?

Dear Mr. Berko: I'm an attorney and a CPA. I'm also retired. And now, I'm mad as hell and I don't want to take it anymore. Early this year, I sent three letters to the Securities Exchange Commission telling them that the billions in bonuses paid to Merrill Lynch employees was illegal and I cited "inadequate disclosure" just as Judge Rakoff ruled. One of those letters was addressed to SEC Chairman Mary Schapiro. I never got the courtesy of a reply. Back in 2000, I sent two letters to the SEC including documentation that John Rigas and his three sons were milking Adelphia Communications (a large cable company) out of hundreds of millions of dollars. My letters were ignored. And I was even naive enough to send a letter to my U.S. senator. I did get a reply, but it was a dumb form letter thanking me for my interest. Are the lawyers who work for the SEC on the take? I think the only reason Bernard Madoff got away with stealing $65 billion is that he had to grease a lot of palms at the SEC and the Financial Industry Regulatory Authority. Are the SEC lawyers and the lawyers at the FINRA on the take? That's the only conclusion that makes sense. S.R., Oklahoma City

Dear S.R.: Several years ago, a research oncologist told me that "Pfizer has stopped using white rats in their laboratory experiments and are now using attorneys." When I asked why, she said: "There are three reasons. (1) There are more attorneys than white rats, (2) You don't become attached to an attorney as you would a rat and (3) There are just some things that you can't get a rat to do." Perhaps it's time to begin fining lawyers for providing fraudulent advice; maybe it's time for the courts to hold lawyers accountable for legal prestidigitation that violates the ethics of society; and maybe it's time to close all the law schools for 20 years. This egregious species has overpopulated the planet, and their increasing numbers are counterproductive to society.

Anybody, even with a room-temperature IQ, would be shocked that Bank of America was fined a niggardly $33 million by the SEC for gifting $3.9 billion to some Merrill employees after receiving $40 billion in government bailout funds.

But a fagot of over-fat, cigar-chewing lawyers in $3,000 Baroni suits convinced the SEC's callow Mary Schapiro that those bonuses were fine and dandy. Holy Moses, Matthew and Methuselah ... that $3.9 billion came out of the taxpayers' pockets, and the piffling $33 million penalty is being paid by the victims of this assault. I don't think the bank should be fined; rather, I'd fine all the executives that caused it to happen including the complicit lawyers. Shakespeare was right in "Henry VI": "Kill all the lawyers."

While I understand and know how you feel, you must realize that political corruption is one of society's problems that is immune to improvement. Mary Schapiro ran FINRA, an organization that looks for misbehavior in the brokerage industry and is over-staffed by a gaggle of puerile lawyers who couldn't make peso in private practice. And as a sop for her bureaucratic excellence and friendship with the administration, she now heads the SEC. What a joke! The SEC, like FINRA, is also over-staffed by lawyers, many of who have less common sense than a dung beetle. I won't say the SEC or FINRA are corrupt, but after numerous "in-your-face" clues over a dozen years, how come the SEC and FINRA never investigated their good friend Bernard Madoff? When Bernard Ebbers of World Com was fleecing the public, when the Rigas family was stealing hundreds of millions from Adelphia Communications, when the Enron boys were fixing the books, when Allen Stanford's bank was fleecing billions in CD money from investors, when the CEO of Quest Communications was violating federal securities laws, etc., ad nausea, the SEC and FINRA lawyers sat around with their thumbs in their ears. And after all the damage was done, not before, the SEC became involved.

I can fill this page with examples of reactive, not proactive, examples of FINRA and SEC failures. Heck, some 15 years ago, I called SEC Chairman Arthur Levitt about the potential derivative dangers. He listened politely but wasn't interested. Bear Stearns, Merrill Lynch, Lehman Brothers and other brokerages were making too much money in the derivative business, and some say, sharing in the lucre with Congress. And that's the way it will always be.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.