The Hypocrisy of Doing Business with Hypocrites
Here's breaking news: Your trusts and estates lawyer has been violating U.S. law by helping his clients hide money offshore in illegal trusts. Previously, he had brushes with the law due to allegations he deceived his clients. He quietly settled these charges.
Would you still trust him to handle your estate?
Of course not.
So who's managing your money?
UBS describes itself as "one of the world's leading financial firms." It employs more than 70,000 people. In the U.S., it has more than 8,000 financial advisors "ready to serve you."
UBS has very lofty principles. Here they are:
"UBS is firmly committed to corporate responsibility and actively strives to understand, assess, weigh and address the concerns and expectations of the firm's stakeholders. This process supports UBS in its efforts to safeguard and advance the firm's reputation for responsible corporate conduct. In very direct ways, responsible corporate conduct helps create sustainable value for the company."
Trying to keep the tarnish off these values has been a full time occupation for teams of UBS lawyers recently. Here's what I mean:
In February, 2009, UBS paid a whopping $780 million to avoid a criminal indictment for defrauding the U.S. government by helping Americans secrete their assets in Switzerland.
In a settlement announced this week, UBS agreed to disclose the names of 4,450 Americans who used its services (for a fee, of course) to cheat the U.S. government.
This is not the first time UBS has engaged in conduct that crosses the line.
On August 8, 2008, UBS agreed to buy back $8.3 billion of auction-rate securities it sold retail customers. It was accused of misleading investors concerning the liquidity of these securities. Of course, it admitted nothing in the settlement agreement.
In April, 2003, UBS (and nine other top investment firms) agreed to settle claims that its analysts defrauded retail investors. UBS contributed $80 million to the global settlement fund, without admitting any wrongdoing.
As the analyst settlement demonstrates, UBS is probably no worse than many of its competitors.
It's bad enough that brokers separate clients from their money every day by touting their services as "financial pros" who add value, when the reality is quite to the contrary.
It's worse that their conduct is such a departure from the values they espouse.
You could make the case that refusing to do business with them is a moral imperative.
That is the case I am making.
The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein.
Dan Solin is the author of The Smartest Retirement Book You'll Ever Read.
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Day's, month's, year's, on end, outsourcing was exposed, as a major detrement to our Gov. financial well being. EVERYONE blew it off. Because so many have stashed their cash in off shore, and got by with it. The guilt was spread in so many directions lawmakers looked the other way. Obama's making them clean up their act, it must hurt. I hope they stay on top of it! I get so sick of the little guy going to prison, and the fat cats can get by with everything. If you rob a bank you get X amout of years to figure it all out. Not so with the rich and wealthy, their lawyer's buy them out of the slammer. I haven't seen any names posted(whats with that?) Thanks Dan! Please help us believe in the American system again.
We used to call our country, "Uncle Sucker .More & more politicians entered "Public Service" solely to profit personally, ..The MOST DANGEROUS phenomenon signaling a reversible decadence & decay in the USA was most apparent in the late 70s & 80s: the Age of Rabid Decline of Citizen Legislators, when for the FIRST TIME the MAJORITY of Congressional members HAD NEVER EARNED in the real world as much as they were compensated in Congress by unwilling corralled average taxpayers .And they decide who gets what of our money, including WRITING LAWS TO INCREASE THEIR OWN pay, AUTOMATIC PAY INCREASES, ROLLS ROYCE bennies like millions each in health care provisions, air force jet planes to command, million dollar plus office expenses, fantastic travel & fly home & back Washington,Virginia homesites only multi-millionaires remotely afford, Capitol building luxuries [oh, 24-7 hospital care by MDs,Rns, Masseuses] & more.) WHAT does THE DC. COMPANY "CHAMBERS,CONLON, & HARTWELL SPECIALIZE IN? CHARLES GRASSLY & MRS. GRASSLEY CAN EXPLAIN IT TO US SIMPLE FOLK.
The next logical decline:rabid wholesale selling of the Democratic Republic of the United States of, by & for its people; not a result of outside invasions-from inside decadence & unbridled corruption; It was engineered by the Public Officials sworn to uphold the US Constitution & Laws of the US; ideological lunatics, as well as privately owned & operated morally- bankrupt government officials at all levels, all branches of government who've no moral compasses, no conscience,no capacity to see ahead to finite consequences for
Guy in Flordia helped people setup offshore accounts.
The people went to deposit their money themselves.
Then the guy went down and withdrew the money his help was to be on the account he set up.
All legal and the tax evaders had not where to turn.
The frauds are laughing all the way to their foreign bank. That's because the U.S. will pick out a couple of examples to prosecute and do absolutely nothing about the people who were most responsible. In the U.S., big financial frauds from big financial companies pays off big time.
The way the media operates, you would think Bernie Madoff is responsible for the recession. He's a small fry compared to the gigantic frauds that caused the recession. They are still having a grand time on their millions of fraudulent profits.
Yet the fraudulent remain in business. The joke's on us.
and one of those cheats who is being investigated for helping his clients cheat was golfing the other the president.
I am waiting for gold to crash like it did in the 70's lol the games Central Banker play.
They still have oil.
Correction... I meant you might break even, after 25-30 years. Need a longer horizon than that to see any benefit from this supposed outperformance. Note also that the outperformance is probably in the ten funds they decided to keep. Be aware that many companies start with 20 funds, drop or merge the underperformers, so all their published data can show only the good performance. Note, I think American funds are relatively legit, I just don't buy their value proposition.
So what is it you are investing in? Are you producing any actual goods or only fake paper?
I think you may be misunderstanding my post... and I'm not sure what you mean by fake paper. It's pretty tough to distinguish where fiat currency ends and a productive economic activity begins, because in reality it's intermeshed. Your question sounds political rather than financial.
In any case, whether I invest in my wife's 401K American Funds or go through Vanguard, or whether you talk about my primary portfolio that I hold with my employer, I invest in a range of funds, mostly Index funds, that represent the market. So if Mfg is 50% of the WW market, then half of my investments support production of actual goods. I also have substantial investments in US Bonds, so I guess I'm supporting the bail out indirectly. Thirdly, World and Emerging Market Bonds... so I'm supporting global productive capacity to the extent that the related markets are composed of productive companies. I don't have much in the US Market, which is mostly a FIRE economy anyway (Financials, Insurance, Real Estate) so I'm "under-invested" in unproductive activities taking place in this country. That's probably as close to a real answer as I could give.
Waa hoo! you tell 'em Mr Solin! One would think these big corporations actually do something close to what they claim to do, but i know first-hand the reality is that they skewer you with fees and charges you don't know you are paying, and for no real value add (except for the guys avoiding taxes - I guess that could be construed as "value", at least until you have to pay penalties to the IRS.) On a related note, it's offensive how dense and misleading prospectus' are. As for my wife's new 401k, after pages of misleading legalize, I found 11 fees and charges of various types, about 5 of which were unavoidable, and several undecipherable. Edward Jones skims 2% up front. Then American Funds (only type offered) front end load several percent. My wife's assigned advisor, when confronted with these facts, said they had a smaller 'pool' than the big companies, and can't get the same low rates. pfeh! I ran a model to find my payback period after investing in those funds, assuming their claimed outperformance of about 1.25% historically per annum vs say, investing with Vanguard. If you had 25-30 years it might... might pay off, if American delivered. I'm not taking that bet.
Thank you Mr Solin for providing a lucid example how the public is manipulated through corporate advertising that is, in most cases, contrary to the truth of their actions.
I think it is an embarassment how the general public is so easily manipulated by sound bites and advertising.
Also fustrating is how the rank and file employees at these corporations tow the company line from the latest advertising campaign as though it gospel.
How good it is to see, .. a moral imperative" in print. Thanks for your courageous work.
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