I was watching a CNBC special recently about the Enron scandal. During the program the announcer said that Merrill Lynch was complicit in helping Enron “cook the books.” I may be mistaken, but I don’t recall hearing of any legal action taken against Merrill over this. The narrator went on to explain how Merrill’s stock analyst was fired because he wouldn’t give a “Strong Buy” recommendation on Enron. This analyst didn’t believe the numbers on the balance sheet added up to the same ‘rosy’ story Enron was espousing. I also thought about how Merrill would have ceased to exist if it had not been acquired by Bank of America. Yes, Bank of America, the same company that acquired Countrywide and all those toxic loans.
From Lehman to Bear Stearns to AIG to WAMU, the American public has been utterly shocked as these stalwarts of industry brought our nation’s financial system to the edge of the abyss. And now we are hearing about Goldman Sachs and its alleged fraud. Is it possible that any rational thinking human being would not question the honesty and integrity of these “darlings of Wall Street?” I don’t see how. To top this off, as if it needed any toping, investors experienced huge losses as a result of the selfishness and greed of those who earned some very hefty paychecks. So I suppose not everyone lost, right? Again I ask, “Will there be any legal actions taken against those who lied and cheated and disregarded the laws of our land?” I wouldn’t hold my breath. Now why am I going on and on about this?
In one sense, the sudden downfall of these firms represents a gain for the ethical independent advisor. In another sense, their loss is a loss for everyone. You see, every dishonest action taken by someone in our industry brings about an erosion of trust on the part of the consumer. Also, what have we been told is one of the most important things an advisor can do? Differentiate yourself from the rest of the pack. As a result of the blatant illegalities of so many, differentiating ourselves has become a very easy thing to do.