August 29, 2010
I am an individual investor and a strong proponent of having the financial industry incur additional legal obligations to inform the investing public of their fiduciary duties, compensation, ownership or other interests in the investments they sell and their qualifications in the financial services industry, all in plain English language.
While I am a white collared, educated, professional in the information technology industry, I still find the vastness and confusion of the financial industry too unnecessary. I feel that this complexity to the individual investor offers too much cover for the unscrupulous to obfuscate and inveigle the people they market to and create financial distress on ordinary working Americans.
I have had the experience of being solicited by brokers and dealers who pump up a financial product and resist answering my specific questions as to why it is a good investment, proof of their own investment in the product or a clear explanation of how they benefit from the sale of the product. Clearly by not having a federal law to induce more transparency these brokers and dealers are not acting in the best interests of their clients voluntarily.
The United States suffers all too much by the corrupt and greasy dealings of the dressed up dregs of this financial services sector. These relative few tainted groups, companies and person undermine the confidence of investors at-large and have a profound impact on the stability of personal finances as well as national economic forces. This is why I feel strongly that the federal government should impose more regulation that forces more transparency from brokers, dealers and investment advisers.
Specifically, I suggest the following
a) Licensing of all brokers, dealers, advisers and consultants in the financial services industry just as we license plumbers and electricians and barbers.
b) A full disclosure requirement for all brokers, dealers, advisers and consultants in the financial services industry that details their compensation plans, their fiduciary duties to act in the best interests of their clients (or not), their liabilities for any losses incurred by an investor who uses their advice, and their own investment position in any product they recommend or sell.
c) That all fees be tied only to gains and losses in the actual investments. Too often they charge fees whether or not the investments they sell make any money for the investor. An investor can sign a contract that guarantees the investing service a reward but then uses pages and pages of contract language to indemnify and hold harmless any losses by the investor. This is an unacceptable practice and there needs to be a remedy. If one can sue a doctor for causing harm in the process of healing a patient then certainly one should be able to (MORE EASILY) sue a financial service for causing financial harm to a client.
d) That all forms filed with the federal government by brokers, dealers, advisers and consultants in the financial services industry come with the consequences of steep fines and/or imprisonment for filing any false information and that, like the Sarbanes-Oxely laws, the officers of the financial firms are held accountable for any false filings and included in the federal legal consequences.
I am in favor of rules that let the financial experts do what they do but all within a framework of honesty with consequences should they rely too heavily on the loopholes and lack of transparency requirements. I do not feel that the financial industry as a whole has enough integrity to police itself. I also feel that the federal government can and must do a better job policing the financial sector of our great nation as it is crucial to America's success domestically and globally. The feds have fallen asleep in recent years while Bernie Madoff was stealing billions
PLEASE WAKE UP
Mr. Jeff Sheehan