Andrew Gluck

ContactAndrew Gluck is a veteran financial reporter and the founder and CEO of Advisor Products Inc., a marketing company serving 1,800 financial advisory firms.
read more ...

Advisor Products Inc.

JP Morgan Chase Mutual Fund Sales Scandal Shows SEC Is A Joke At Investor Protection: RIAs Should Rise Up Against The SEC And Be Advocates For Investors edit
Tuesday, July 03, 2012 20:54

Tags: Advisor businesses | competitors | differentiation | fiduciaries | integrity | mutual funds | regulation | sec

The front page of The New York Times today reveals what a joke SEC regulation and investor protection is.
 
JP Morgan is accused by former brokers of selling proprietary (“house brand”) mutual funds instead of other funds because advisors got fatter commissions.  “Financial advisers say they were encouraged, at times, to favor JPMorgan’s own products even when competitors had better-performing or cheaper options,” reports The Times.

This Website Is For Financial Professionals Only


 
 
The sales abuses were an open secret then as they are now. (An SEC study, ironically led by Merrill Lynch’s Chairman Daniel Tully, found widespread mutual fund sales practice abuses in 1995.
 
You fiduciaries ought to be blogging about this madness.
 
What’s even crazier is that before you could wash the ink off your hands from this morning’s paper, JPMorgan Chase was being probed in yet another scandal, manipulating the electrical power market.  
 
This is happening just a few days after the trading loss racked up (by a former classmate of mine) was estimated to total $9 billion.
 
To be clear, the SEC is a joke because it’s not created a deterrent to prevent Wall Street brokerages from selling house-brand mutual funds that pay brokers more than other funds, creating an unforgiveable conflict of interest that has screwed investors many decades, and everyone who understand Wall Street knows this.
 
RIAs should rise up against the SEC and  be advocates for investor protection by writing their Congressional representatives and getting membership groups to advocate for investors. That’s what a fiduciary should do.
 
Advisors must be pro-consumer. Niot just pro-advisor.
 
  

 

Comments (7)

...
brentb843
Andy - wrong regulator. The fund sales are UNDER FINRA.

The sales only needed to be suitable...sad, but true.
brentb843 , July 05, 2012
...
bramsay
Andy, what planet are you living on!!!!!

This is FINRA's lack of consumer protection.

You're doing this again.

http://www.ritholtz.com/blog/wp-content/uploads/2012/07/hategovt.jpg
bramsay , July 11, 2012
...
bramsay
It's also the pinnacle of duplicity for those who starve regulatory agencies of funds to actually perform regulatory activities to then castigate those agencies for failing to perform regulatory activities.

http://money.cnn.com/2012/02/10/news/economy/cftc_sec_budget/index.htm

Citing Madoff as an example of failure for the SEC in an effort to transfer oversight of RIA's to FINRA is especially audacious given that Madoff was not even overseen by the underfunded SEC until the last couple years before he was exposed, while from the very start of his scam he was FINRA regulated.

Bob Veres has it right with this article

http://www.financial-planning.com/fp_issues/2012_7/Broker-Dealers-wirehouses-lobbying-position-2679522-1.html?zkPrintable=1&nopagination=1

bramsay , July 11, 2012
...
agluck
The SEC is responsible for making sure FINRA does its job. The buck stops there. In this instance, you';re right that FINRA should have done more. But since it has not, it's the SEC's job to step in. SEC supervises FINRA! SEC is the government. FINRA is not.
agluck , July 11, 2012
...
bramsay
Andy, I have an idea. How about you fire half your staff but sign on 50% more customers, and then tell your staff that they're a joke for not being able to keep up with the workload.

bramsay , July 11, 2012
...
agluck
You don't need much staff to know if firms are committing the same violations over and over again for decades. If you do real stuff, you can do it with a small staff. You should know that. You do it. SEC needs to create a credible deterrent. Nothing complicated. Put a Wall Street CEO in jail.
agluck , July 11, 2012
...
brentb843
But the problem is that it is not a violation when a FINRA firm does it.

When the SEC hits FINRA, FINRA goes to court saying they are overstepping.
brentb843 , July 12, 2012

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

busy
 

Login

Banner
Banner
Banner
Banner

Comments

Banner
Banner
Banner
Banner
Banner

Reviews

Banner