The Derivative Project

“Investor Advocates”: More on the Wolves in Sheep’s Clothing

“Investor Advocates”: More on the Wolves in Sheep’s Clothing

The Derivative Project, non-partisan, has been working to ensure the American economy is rebuilt after a devastating financial crisis, based on sound economic fundamentals, not speculative trading in credit default swaps on the demise of corporations and sovereign debt.

The Derivative Project’s main focus is on protecting and enhancing American’s retirement savings, which were unnecessarily wiped out during the 2008-2009 financial crisis, due to conflict of interest between Wall Street regulators and Wall Street, an area not discussed in most media reports.

The Dodd-Frank Act, thanks to Senator Akaka’s (D-HI) efforts, calls for a new position at the SEC, the Office of Investor Advocate, that will report directly to the SEC Chairman.


Fall 2010 and the Almost Appointment of the Dodd-Frank mandated SEC Advocate

Fall 2010, without much publicity or public debate, the SEC was ready to quietly appoint, to the detriment of every American retirement saver, a Wall Street  employee, an insider, who publicly purported to be an “Investor Advocate” and did not disclose he was also registered with the SEC as a SEC Registered Investment Adviser and receiving income from Wall Street.

Here are the details on the Consumer Federation of America ‘s (Barbara Roper) public support for a Wall Street paid employee to represent Americans who had already lost trillions of dollars in the 2008-2009 financial crisis, which was avoidable if:

  • SEC and FINRA did not owe allegiance to Wall Street
  • Retirement Advisors were not materially conflicted 
  • Retirement Advisors were professionals trained in today’s global capital markets
  • Individual Retirement Accounts investors had the right to go to federal courts and not have to have their complaints about illegal taking of retirement funds kept from public scrutiny by the SEC and FINRA’s mandatory arbitration process and lack of private right of action for every investor complaint
We explore two publicly championed “Investor Advocates”, ironically both with very strong ties to Wall Street:

/files/6/7/3/9/5/268450-259376/TDP_SECInvestorAdvocateDec32010.pdf”>SEC Commissioners December 2, 2010 to advocate for an Investor Advocate that was:

  1. Neutral, and did not work for a Wall Street firm, 
  2. Managed his or her own retirement accounts, to understand real investor issues
  3. Had first hand experience in managing counter-party credit risk of OTC derivatives, 
  4. Trained in options, retired Series 4 Options Principal, 
  5. Understanding of global capital markets and currency risk
  6. Understanding of credit risk through experience in international banking
  7. Was not conflicted.
The Derivative Project emailed Barbara Roper, Consumer Federation of America, and asked to work together on proposing an Advocate that did not work for Wall Street.  Barbara Roper did not return The Derivative Project’s telephone calls, nor did Americans for Financial Reform, concerning proposing and supporting a neutral, professionally experienced and non-conflicted SEC Advocate.

Wall Street’s Agenda for American’s Retirement Savings
In addition to working for Wall Street, Mr. Bullard has an Agenda, as revealed in this article:

“Bullard is also a proponent of fixing the retirement system, due to the “inadequacy of the 401-(k) as the sole retirement vehicle,” In a joint letter from his Fund Democracy, The Consumer Federation of America, and Consumer action, to the Department of Labor, Bullard advocates provision of “standardized Simple Annuities,” for retirement accounts;”
A yet to be explored Agenda for real financial reform is the cozy relationship between the insurance industry, academics, Consumer Federation of America and AARP and the payouts received for all these groups, including so-called “advocates”, from annuities and other brokerage products. 
The most critical issue is to ensure the SEC appoint a neutral advocate, independent of industry, to ensure American’s retirement savings are not beholden to the whims and conflicts of the profits of insurance companies and Wall Street brokerage houses and/or the academics that advocate for industry through biased research reports.
As the conflicts between Wall Street regulators and Mr. Bullard have been exposed, one must be aware of others from the brokerage industry who now claim they are the Americans’ investor advocate, despite having the position and power to alert every American of the dangers lurking in their retirement accounts back in March 2008, that was clearly evident to trained global capital market professionals.
Wall Street’s profits are directly proportional to how much money retirement investors have in the stock markets.  If Wall Street had moved retirement savings to cash or CD’s their profits would have been lower.  Wall Street chose their profits over the ability to retire for thousands of Americans.  Yes, it is indeed time to get angry if you retired and are now back at a 9 to 5 job. These conflicts of interest must be eliminated to protect every Americans’ retirement savings from another $2 trillion dollar needless loss.
Financial reform and proper stewardship of American’s hard-earned retirement savings can only come from an Investor Advocate who is a trained and experienced professional in global capital markets and who has no conflicts of interest.   
Americans are now connecting the dots post Madoff, Stanford, Goldman Sachs, M.F. Global, $3 to $7 billion JP Morgan credit derivative speculative trading loss, May 6, 2010 flash crash and now a carefully engineered IPO that rewarded Wall Street underwriters and insider/original Facebook(FB) private inve
stors, to the detriment of the “little” investor, suckered into the Wall Street FB sham.
How Many More Tragedies and “Egregious Errors” Will and Can Americans Tolerate?
Will the SEC and Congress continue to appoint Wall Street and Washington insiders for the most crucial role of proper stewardship of American’s hard-earned savings and that of restoring our economy to sound, sustainable economic development?  Can Americans, alerted to the conflicts between industry, regulators, Congress and so-called “advocates” vote for real change in the 2012 elections, to protect their hard-earned savings? 
What is one to make of the Consumer Federation of America, Fund Democracy, AARP and other so-called “consumer” and “investor advocate” groups that most clearly have material financial conflicts that prevent them from being bona-fide “advocates’?
What will happen if the SEC appoints a conflicted SEC Investor Advocate?  The American economy will continue to creep along, stagnant, while the disparity of income between the top 
1 percent and other Americans will continue to increase.  Capitalism cannot survive with a democracy that is engineered by a crew that controls the Judiciary, Congress, the Executive Branch and the regulators. It is exactly why our economy is now stagnant.  
The role of so-called “investor advocates”, biased academic studies, Congress and Wall Street regulators is no longer a topic that can been dismissed lightly if one seeks true Wall Street reform and economic recovery.