A FEW BAD APPLES

it has been repeatedly said over the past few years, that it was just "a few bad apples" that were responsible for the corporate malfeasence and fraud that occurred during the boom of the 1990's. as time goes on, it seems that there were more than just a few bad apples responsible for the corporate scandals that fleeced the investing public. if we use ENRON as the start and follow the news coverage to where we are currently uncovering a widespread mutual fund trading scandal, the few have clearly turned to many and i fear that the many will turn into alot.

it started off slowly with the uncovering of the enron fraud. lay, skilling, and fastow along with the investment bankers, arthur andersen and probably the unknowing aide of the vice president and his energy task force. to date, the only apple that has been punished is arthur andersen and its top notch cpa's that created the books for the corporation. ernst & young got to stay in business but has had to pay lots of fines for assisting other companies in various frauds, including illegal tax evasion schemes. from there, and in no specific order, we had tyco's kozlowsky and sullivan, worldcoms ebbers, and adelphias rigis family. we've had tenet healthcares barbakow and healthsouths scrushy scamming medicare. we had martha stewarts and imclone's waksul fiasco. we've had bristol meyers forcing drugs on wholesalers to meet eps estimates. we continued with aol/time warners advertising scam, and interpublic groups misdeeds. we've had bad apples in the nyse trading pits with the labranche scalping clients pennies by jumping a front a few too many times and other specialists being investigated for the same. we've had to clean house at the nyse because the BOD paid the CEO too much. we've had foriegn currency trading scam and an energy trading scam. we have had corporate espionage at boeing and huge defense contracts awarded to the presidents ceo buddies with no bidding. we have had the investment banks in unison claim they did nothing wrong in there research divisions, yet pay $1.4 billion back to investors due to conflict of interest violations. freddie mac miscalculated eps for the last 3 years to by $4.5billion. ceo's of some of the largest mutual fund companies have been indicted for fraud including pilgrim & baxter, strong and others are under investigation. now we are uncovering that mutual funds were gaming the public with the help of hedge funds and brokerage houses each accepting fees along the way. names include janus, prudential, putnam and alliance, all of which oversee billions of dollars in assets belonging to state and corporate pension funds.

without the efforts of elliot spitzer and his team of investigators, most of the above crimes and indiscretions, would have never been uncovered. the SEC along with the other self regulatory agencies, were unaware and unconcerned about continued violations of securities laws being broken and disregarded by almost every player in the industry. even now, the SRO's are hesitant to punish and prevent further abuses.

A FEW BAD APPLES?! maybe a few bad apples at every large publicly traded company and at every investment firm, mutual fund company, stock exchange and self regulatory agency. when it is looked with a broader perspective, it seems to me that there was a kind of coordinated effort to rip off the investing public. a sort of conspiracy between the
investment banks, public companies, mutual funds, self regulatory agencies and accounting firms to create an investing environment that hides risk and overstates returns.

unless the culture of greed in corporate america and the environment of biased and unchecked investment advice is radically reformed, the capital markets will remain corrupted, inefficient and very risky.