Monday, May 12, 2014

Equal Opportunity Grifters . . . . .

[ click to enlarge ]

Well . . . The Gadfly supposes this makes all of the oligarch's Wall Street financial crimes ok -- apparently they spread the theft around:

When liberals talk about economic regulation, they often use eye-rolling abstractions like “accountability” and “transparency.” What do those things even mean? How are those objectives enforced, and what would this enforcement even look like? Luckily we have a real-time example of what it all means, courtesy of Dodd-Frank and the SEC. It involves one of the more controversial parts of the financial markets, and it gives us a view into how reform happens.
As a result of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, private equity firms must register with the Securities and Exchange Commission (SEC). This, in turn, allows the SEC to examine the behavior of private equity firms on behalf of investors. The SEC just completed an initial wave of 150 firms, and what it found is shocking.
These results were unveiled last week when Andrew Bowden, the director of the SEC’s examinations office, gave a speech titled “Spreading Sunshine in Private Equity.” The big takeaway: Half of the SEC’s exams find corruption in the way fees and expenses are handled. Or as Bowden forcefully describes it: “When we have examined how fees and expenses are handled by advisers to private equity funds, we have identified what we believe are violations of law or material weaknesses in controls over 50 percent of the time.”
As Bowden notes, the business model of private equity, which manages almost $3.5 trillion dollars of our nation’s assets, has unique conflicts of interest built into the structure. Private equity firms use their client’s money to do leveraged buyouts of companies. Since this gives them major operating control of both the investment and a pool of other’s investment money, there are significant opportunities to shift costs and otherwise skim off their investors.
Bowden’s speech has numerous examples. One scam is to fire employees of the private equity firm and rehire them immediately as “consultants.” The investors are responsible for consultants’ salaries, where private equity employees are paid out of their own pockets. Another is taking what most private equity investors believe to be part of management fees, things like legal and compliance costs, and billing their investors for them without the investors properly knowing it. A third is private equity firms lying about the valuation methods they use to tell investors about the returns they make each year. All of these are ways for private equity firms to take money from their investors for themselves.

Hahaha!  So basically, these private equity firms (think Mitt Romney and Bain Capital) not only were fucking over and sucking the lifeblood out of the 401k's of John and Mary WorkingStiff, but they were also fucking over and pilfering from the bourgeoisie  private equity investors, people who aren't exactly in the 1% club, but have enough disposable cash/income to invest a fair chunk of it in the equity market.

It really is nail-in-the-coffin level evidence that the Wall Street casino is a nothing more than a huge, byzantine con game that is massively rigged in favor of the house -- in this case the house being the Wall Street financial institutions and banks, and the oligarchs who run them.

It all just makes The Gadfly inch even closer toward just openly rooting for the whole thing to just implode in on itself and let the laws of human nature and societal retribution take their historical course of action.


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