I have always wondered why people continue to do business with large securities firms that have repetitive history of disregard for their clients and management that consistently places their own profit motive above their clients welfare. Here are just a few more examples from the last few months:
December 28, 2012
WASHINGTON — The Financial Industry Regulatory Authority said Thursday that five of the country’s largest banks will pay $4.5 million to settle claims they used municipal and state bond funds to pay lobbyists. The regulatory agency said that between 2006 and 2010, Citigroup, Goldman Sachs, JP Morgan, Merrill Lynch, and Morgan Stanley made payments to the California business lobbying group Cal PSA and requested that those payments be reimbursed as underwriting expenses from the proceeds of municipal and state bond offerings.FINRA also said the firms did not adequately disclose the nature of the fees to issuers. By not doing so, they violated fair dealing and supervisory regulations. The firms neither admitted to nor denied the charges.
June 21, 2012
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Merrill Lynch, Pierce, Fenner & Smith, Inc. $2.8 million for supervisory failures that resulted in overcharging customers $32 million in unwarranted fees, and for failing to provide certain required trade notices. Merrill Lynch has provided $32 million in remediation, plus interest, to the affected customers. Brad Bennett, FINRA's Executive Vice President and Chief of Enforcement, said, "Investors must be able to trust that the fees charged by their securities firm are, in fact, correct. When this is not the case, investor confidence is threatened."
May 1, 2012
(Reuters) - Citigroup Inc Morgan Stanley, UBS AG and Wells Fargo & Co agreed to pay more than $9.1 million in fines and restitution for selling leveraged and inverse exchange-traded funds "without reasonable supervision," the Financial Industry Regulatory Authority said. The settlements announced on Tuesday are the latest move by regulators to clamp down on these complex investments. But some investor advocates wonder if the fines go far enough in a case involving $27.1 billion in transactions.
The brokerages likely earned much more in commissions from selling the products than they are now paying in fines, said industry observers.
January 30, 2013
Ameriprise Sued by Employees Over Excessive 401(k) Costs
Ameriprise employees sue their own firm because their own proprietary mutual funds have underperformed the market and to even offer them in a 401(k) plan violates the trustee’s fiduciary duties. An additional count in the complaint alleging that the TPA who administered the plan charged excessive fees and paid “kickbacks” to Ameriprise.
If Ameriprise’s own employees are suing the company because their funds under-perform and have excessive fees, why shouldn’t every Ameriprise client who has a 401(k)/IRA with their firm also sue Ameriprise? What about employees of XYZ company suing their employer/plan fiduciary if they are offering Ameriprise funds in their 401(k)/profit sharing plans?
How can you stop this? STOP DOING BUSINESS WITH THESE FIRMS! Sometimes, people are really stupid. They want things to change but they take no action. If you want to see this end, then close your accounts at the large banks and securities firms(there are plenty of others smaller firms with positive profiles to serve you). Maybe people are double stupid - not only do they keep supporting these companies with business, they continue to expose their assets to potentially be the next victim ripped off.
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