On February 12th, the Financial Industry Regulatory Authority (FINRA) fined two Wachovia units more than $4.5 million for violations related to the sales of mutual funds and Unit Investment Trust. The fines were levied against Wachovia Securities and Wachovia Securities Financial Network. FINRA stated, "Firms must consider all relevant factors when recommending securities. The failure to provide available discounts or recommend a suitable share class wrongly increases costs to investors".
Last Tuesday the SEC filed civil charges in Dallas, Texas against Stanford International Bank Ltd., Stanford Group Co. and Stanford Capital Management LLC, accusing them of a "massive ongoing fraud" by selling, through their International Bank, $8 billion in certificates of deposit with extremely high interest rates. The court appointed receiver has moved to add Stanford Financial Group and Stanford Financial Group Bldg Inc. as relief defendants.
Last Thursday UBS AG, Switzerland's largest bank, agreed to pay a total of $780 million in fines, interest and restitution to avoid U.S. prosecution on charges that it helped thousands of wealthy Americans evade taxes. On the same day, the US sued UBS AG in order to have them to turn over the names of as many as 52,000 Americans who allegedly tried to evade taxes on $14.8 billion held in secret accounts.
All three of these companies are close to home. UBS and Stanford Financial Group operate offices in Charlotte, while Wachovia Securities have a representative in almost every one of their branches in the Charlotte Metro area. In fact, these three organizations have operations in virtually every major metro center in the United States. Because they are so well known and operate in most local markets, it increases the likelihood these fines and lawsuits will reinforce the fear and mistrust of the entire financial services industry.
Instead of letting this increase your fear and mistrust, you should take this information as proof that the system put in place for your protection is working again. Over the last decade, our "protectors" have failed to take their job seriously. Infractions have been routinely overlooked. These organizations were created by our government, but their staff were cut to the bone, as was the ability to enforce the rules that were already on the books.
You should realize that these actions are sending a positive message to each and every person who relies on help from professionals. They are saying, directly to those professionals, "You had better do things right for our citizens or else..."
Last week we said we will soon see the "Return of the Optimists," and this has begun with some help from former President Bill Clinton. Clinton appeared on ABC's Good Morning America and said the following in reference to our newest President and his forthcoming speech tonight: "I just would like him to end by saying that he is hopeful and completely convinced we're gonna come through this," and, he added, "I think you will see some good economic news from the stimulus fairly soon." Go Bill!
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