All Articles Finance While You Were Working - March 1

While You Were Working – March 1

The fiduciary rule continues its demise, One scandal expands while another one ends and the SEC meets the internet

4 min read


Enron sign

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The fiduciary rule continued its looooooong walk down the plank

The Labor Department pushed back the deadline for brokers to comply with the fiduciary rule until June 9. The 60-day delay comes as no surprise and is likely just a precursor to outright scuttling of the rule. Fans of the fiduciary rule are no doubt upset that the investor protections it contains will never see the light of day. However, the rule did serve one sacrificial purpose: The White House’s handling of the roll back was so poor that it might be a long time before we hear 1600 Pennsylvania Ave. say anything else about financial regulatory reform. Did you notice President Trump said zero, zilch, nada about financial regulatory reform during his speech to Congress last night? Oh I am not saying Dodd-Frank, the fiduciary rule and other regulatory reforms aren’t on the chopping block, I am just saying the White House will let the individual regulators and members of Congress wield the axe from now on. That’s because while White House Chief Economic Adviser Gary Cohn is a wicked smart guy (and a Goldman Sachs alum), he might not be the most media savvy. Who can forget this gem from Cohn on the day the Trump administration announced it was targeting the fiduciary rule:

“We think it is a bad rule. It is a bad rule for consumers. … This is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”

Right Gary. Because the last thing mom-and-pop retirement investors want their adviser to do is offer them a menu comprised strictly of options that are good for them.

The scandal that keeps on giving … gave again

Wells Fargo just can’t seem to shake the fallout from it phony account scandal. The bank said in its annual 10k filing that the total number of bogus accounts might exceed the 2.1 million it previously estimated. The phony accounts are bad enough, but at some point a second risk-management question needs to be asked: How long should it reasonably take a bank like Wells Fargo to ascertain the number of accounts it holds that are actually … you know … real? The scandal broke when regulatory fines were imposed 6 months ago and the bank knew about the issue well before the fines were announced. And yet, the bank still can’t say for certain if it has identified all the fake accounts. Tick-tock-tick-tock…

And another scandal apparently stopped giving

It looks like the last big lawsuit associated with the Enron scandal has left the room … along with all the Smartest Guys. A judge in Houston dismissed a case brought by retail customers UBS PaineWebber who accused the brokerage of defrauding them by knowingly taking part in bogus deals to make Enron look more financially healthy than it was. The judge said the plaintiffs failed to prove UBS knew the deals were bad and ruled that that is was Enron that was responsible for using the deals to “cook its books.”

Dalio stepped down from co-CEO role at Bridgewater

Bridgetwater, the firm that has made headlines recently for its quirky management style, announced that founder Ray Dalio would no longer be serving as co-CEO. Dalio will however remain as co-chief investment officer and co-chairman.

The SEC ushered in the era of this whole “Internets” thingy

Now that it looks like the internet might be sticking around for a while, the SEC has announced that public companies will soon have to use new-fangled computer technology like “hyperlinks” to make information more accessible for investors. But don’t worry old timers … your days of having to find a footnote to locate an addendum to track down a regulatory filing won’t end until the new rule takes effect in September.