PRUSec Mutual Fund Market Timing

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ymh_ymh_ymh's picture
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Any former, or current for that matter, PRUSec or Wachovia brokers who think the DOJ was far too lenient in not seeking criminal sanctions against PRUSec senior mgt?
Anyone think the pawns (brokers) got spanked too hard while the execs got off the hook by permitting those common shareholders aka bagholders and D&O insurance firms to pony up fine revenues to make the lazy/incompetent "prosecutors" in the Boston office of the DOJ look like they're doing their jobs?

badmove?'s picture
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yes, upper management used to parade those guys around the office (boston) and say this is how u should do it. same thing @ agedwards. In the  brokers defense, they knew it was a time bomb ready to go off and never came off arrogantly to me.

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Should Boston be capitalized?

Starka's picture
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Boston is already the capital.

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ymh_ymh_ymh wrote:
Any former, or current for that matter, PRUSec or Wachovia brokers who think the DOJ was far too lenient in not seeking criminal sanctions against PRUSec senior mgt?
Anyone think the pawns (brokers) got spanked too hard while the execs got off the hook by permitting those common shareholders aka bagholders and D&O insurance firms to pony up fine revenues to make the lazy/incompetent "prosecutors" in the Boston office of the DOJ look like they're doing their jobs?

Are you saying that the reps who facilitated the late trading were supposed to have been punished less severely than the senior management that quite likely did not know what they were doing?
There is always a failure to supervise component to these things--however common sense requires that a decison maker come down in favor of the idea that those who lead very often do not know what is being done by those who are led.
The "The Buck Stops Here" ideal works well on paper, but rarely in the real world. 

Starka's picture
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It worked for Harry Truman.  He dropped the bomb.  Twice.  And yes, he knew what Paul Tibbetts and crew were doing that morning.

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Starka wrote:It worked for Harry Truman.  He dropped the bomb.  Twice.  And yes, he knew what Paul Tibbetts and crew were doing that morning.
Do you think he knew what was going on at the US Embassy in Mexico?

Starka's picture
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Maybe.  Maybe not.  But he was man enough to accept the fact that as top dog, he and he alone bore the brunt of the responsibility for their actions.
You see, he abhorred the concept of "plausible deniability" which is the concept that you are putting forth as acceptable in the current business world.  This is one of the reasons that management is in many cases justifiably loathed.

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Starka wrote:
Maybe.  Maybe not.  But he was man enough to accept the fact that as top dog, he and he alone bore the brunt of the responsibility for their actions.
You see, he abhorred the concept of "plausible deniability" which is the concept that you are putting forth as acceptable in the current business world.  This is one of the reasons that management is in many cases justifiably loathed.

I am not putting forth the doctrine of plausible deniability.  What I am asking is why should senior management of a brokerage firm be barred because of something being done in the mutual fund department by people that the senior management wouldn't know if they met them on the street?
Should a US President be removed from office because of something done by somebody at the State Department--or is it sufficient to remove the guilty party and perhaps their immediate supervisor?

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Your argument doesn't hold water, simply because from the standpoint of 'the manager', it's common practice to let the sh*te roll downhill, and too bad for those in the valley.  As you rightly point out, it's a common practice which does more than suggest that those in management who condone and allow this behavior are creatures of little to no moral fiber.  Managers should and in my opinion must know that with their elevation to some exalted management position, there is a corresponding increase in accountability.  This is sadly lacking in corporate management over the last 25 or so years.
By the way...that is EXACTLY the doctrine of plausible deniability.

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Starka wrote:
By the way...that is EXACTLY the doctrine of plausible deniability.

Nope, it's reality.  Do you think that Michael Dell is personally responsible for the fact that Dell computers catch on fire?

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NASD Newbie wrote:Starka wrote:
By the way...that is EXACTLY the doctrine of plausible deniability.

Nope, it's reality.  Do you think that Michael Dell is personally responsible for the fact that Dell computers catch on fire?

No, it's plausible deniability.
Are you suggesting that Michael Dell should be rewarded for the company's performance of late? 
Michael Dell, as founder and President of the company should and must bear the ultimate responsibility. 

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Starka wrote:NASD Newbie wrote:Starka wrote:
By the way...that is EXACTLY the doctrine of plausible deniability.

Nope, it's reality.  Do you think that Michael Dell is personally responsible for the fact that Dell computers catch on fire?

No, it's plausible deniability.
Are you suggesting that Michael Dell should be rewarded for the company's performance of late? 
Michael Dell, as founder and President of the company should and must bear the ultimate responsibility. 

No I don't think he should be rewarded for the recent performance, and I have not heard that his board has rewarded him.
As for the rhetoric, "...must bear the ultimate responsibility."  What does that mean, shoot himself in his office?  Just what is the ultimate responsibility?

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Since you don't seem to know, the leader of a company, department, or any other group of employees must in some way be punished for the wrongdoings of his or her subordinates.  If this is not so, all superiors will allow their malfeasances to fall upon their subordinates.  Plausible deniability.
In your example with Dell, do you have some evidence that a Dell employee is somehow responsible for the batteries catching fire due to his or her derelection?  If yes, then a nuber of managers up the food chain are responsible.  If no, then it's now a case of finding out what went wrong, and making it right.  This, by the way, is something that I think Michael Dell is doing right.  His company initiated one of the largest recalls in American business history.  He took the hit...he took the ultimate resposibility to the American consumer.

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Starka wrote:
Since you don't seem to know, the leader of a company, department, or any other group of employees must in some way be punished for the wrongdoings of his or her subordinates.  If this is not so, all superiors will allow their malfeasances to fall upon their subordinates.  Plausible deniability.
In your example with Dell, do you have some evidence that a Dell employee is somehow responsible for the batteries catching fire due to his or her derelection?  If yes, then a nuber of managers up the food chain are responsible.  If no, then it's now a case of finding out what went wrong, and making it right.  This, by the way, is something that I think Michael Dell is doing right.  His company initiated one of the largest recalls in American business history.  He took the hit...he took the ultimate resposibility to the American consumer.

So what should be the penalty extracted from the CEO of a brokerage firm if there is a rogue trader somewhere in the organization?
Should he be barred for life, suspended for thity days, asked to pay a monetary fine?
If you forged a client's name on something and turned it in, should your branch manager be fired?

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To again refer to your Dell example, do you think that the stand he made is going to do his career any good?
I the case of forgery, that's a crime in the event that you didn't know.  And yes, punitive action should be taken against a manager who failed to supervise because you committed a securities crime.  Do you think he shouldn't?  (Here's a hint...if you pick "shouldn't", I must question your moral code, or lack thereof.)

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Starka wrote:
To again refer to your Dell example, do you think that the stand he made is going to do his career any good?
I the case of forgery, that's a crime in the event that you didn't know.  And yes, punitive action should be taken against a manager who failed to supervise because you committed a securities crime.  Do you think he shouldn't?  (Here's a hint...if you pick "shouldn't", I must question your moral code, or lack thereof.)

I think that a branch manager who does not know a broker in his branch is committing a crime is no more guilty of the crime than a parent is if their son holds up a convenience store.
A failure to supervise claim should arise if there is a patern of misbehavior, but to claim failure to supervise regarding a single incident is ridiculous.  Especially when the person performing the illegal act knew it was illegal at the time it was being done.
Bust the manager for failure to supervise in a churning case, but him if there is a second unauthorized trading charge, but there is no way a manager should be busted for a first unauthorized trading charge or for any sort of single incident criminal act such as forgery.
As I said, the idea that the buck stops here is a great slogan, and looked good on Truman's desk, but it's an unrealistic expectation.  Not just in 2006, it was unreal in 1946 and every year since the dawn of time.

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Are you honestly suggesting that if a broker commits a crime such as embezzlement or forgery that his managers bear no responsibility?  Remember...we're not discussing what could be construed as a missed communication, but real crime.  You seem to have a jaded and somewhat limited knowledge of how the operational end of a business works, particularly the financial services business.
As to what you believe regarding right and wrong, unless you're doing some serious leg-pulling here, I'm grateful on behalf of the investing public, that your career is over.

badmove?'s picture
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Shouldn't it be bust, not but(Line # above). Senior mgmt knew what was going on and encouraged it (different acct #'s for the same acct after fund co. kicked them out, give rep a new rep # then open same account under new rep). I know the facts in this case and it was encouraged.

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badmove? wrote:Shouldn't it be bust, not but(Line # above). Senior mgmt knew what was going on and encouraged it (different acct #'s for the same acct after fund co. kicked them out, give rep a new rep # then open same account under new rep). I know the facts in this case and it was encouraged.
badmove?, I'm not sure I understand what you're driving at.

badmove?'s picture
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A fund company would kick out an account for fund timing. Management would then let the rep either re-open the account under a new rep # or a new account # and the whole process (fund timing) would start over again. Management was in on the whole process.

badmove?'s picture
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I was also busting newbies balls from his previous post (paragraph 3, line 1) it should be BUST the manager not BUT.

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badmove? wrote:A fund company would kick out an account for fund timing. Management would then let the rep either re-open the account under a new rep # or a new account # and the whole process (fund timing) would start over again. Management was in on the whole process.
Do you think the CEO of PruSec was in on it?  How far up the food chain do you suppose knowledge of what they were doing went?

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NASD Newbie wrote:
badmove? wrote:A fund company would kick out an account for fund timing. Management would then let the rep either re-open the account under a new rep # or a new account # and the whole process (fund timing) would start over again. Management was in on the whole process.
Do you think the CEO of PruSec was in on it?  How far up the food chain do you suppose knowledge of what they were doing went?

A much more appropriate question would be, "Who SHOULD have known?"

badmove?'s picture
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regional knew

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Starka wrote:NASD Newbie wrote:
badmove? wrote:A fund company would kick out an account for fund timing. Management would then let the rep either re-open the account under a new rep # or a new account # and the whole process (fund timing) would start over again. Management was in on the whole process.
Do you think the CEO of PruSec was in on it?  How far up the food chain do you suppose knowledge of what they were doing went?

A much more appropriate question would be, "Who SHOULD have known?"

Not necessarily anyone.  If you're going to delegate responsibility you must also assume that that responsiblity could be abused without your knowledge.
For example, I don't believe that Ken Lay knew what was going on with the traders at Enron.  There is a point where senior managers are as far out of the lower level loops as the lower level employees are out of the upper level loops.

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NASD Newbie wrote:Starka wrote:NASD Newbie wrote:
badmove? wrote:A fund company would kick out an account for fund timing. Management would then let the rep either re-open the account under a new rep # or a new account # and the whole process (fund timing) would start over again. Management was in on the whole process.
Do you think the CEO of PruSec was in on it?  How far up the food chain do you suppose knowledge of what they were doing went?

A much more appropriate question would be, "Who SHOULD have known?"

Not necessarily anyone.  If you're going to delegate responsibility you must also assume that that responsiblity could be abused without your knowledge.
For example, I don't believe that Ken Lay knew what was going on with the traders at Enron.  There is a point where senior managers are as far out of the lower level loops as the lower level employees are out of the upper level loops.

My point is that one can delegate everything except responsibility, and that is indisputable.

ymh_ymh_ymh's picture
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Jamie Price (now with UBS) knew. Mike Rice knew. He no longer has a job. Danny Ludeman fired him as soon as the SEC Wells Notice (also known as toilet paper substitute) showed up. Pretty sure John Strangfeld knew, too. That moron (in my opinion), Art Ryan, the gutless wonder and world class insurance peddler may not have known.
It went on at Boston under 2 branch managers and 2 regional directors. It went on in NYC metro in 3 branch offices (4 different branch managers) under 2 different regional directors.
The new guy with the SEC in Boston (Bergers) did a nice job on this case. The guy he permanently replaced (Juan Marcellino) is/was a joke. Boilermakers (the union kind, not Purdue football players) with pipe wrenches scared him so badly he looked the other way for a while. If there are no sanctions against the market timers in NYC or their senior management, then it's my opinion the SEC guy in NYC (Mark Schonfeld) and his gutless wonder "boss," Linda Thomsen should find themselves college professor jobs at Smith College since it's Linda's alma mater and maybe they can be both be "big men on campus" in that kind of environment.
Thanks, ladies and gentlemen for your feedback. Have a nice rest of the weekend.
FD: I am not former or current PRU or WB so it's not sour grapes on my part to be whining about what wimps some folks at the SEC and Department of Injustice are.

badmove?'s picture
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the mgr knew and his boss. @ ag edwards the manager knew. Brokers took the fall, what a fvck job.

Starka's picture
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Yet, it would seem, that there are those from management positions who would argue that that is the way it should be.
What an amazing breed.

ymh_ymh_ymh's picture
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What's even more amazing is the SEC under Smith College undergrad alum, Linda Thomsen, refuses to DO anything about it other than going after low level brokers. I guess that's about the best you can expect when you have a former Smith College undergrad alum in "charge."
 
 

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ymh_ymh_ymh wrote:
What's even more amazing is the SEC under Smith College undergrad alum, Linda Thomsen, refuses to DO anything about it other than going after low level brokers. I guess that's about the best you can expect when you have a former Smith College undergrad alum in "charge."
 
 

The other mistake is placing a woman in charge of something.

ymh_ymh_ymh's picture
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Only if she's a former sorority house girl, like Linda Thomsen.
The SEC has a good newbie District Administrator in Fort Worth (Rose Romero). She's a former enlisted woman who served time in the USAF and was an undercover narcotics cop for a while prior to getting her JD and going to work for the DOJ. She's got a lot more testosterone than the guy who's in charge of NYC (Mark Schonfeld). She also makes that loud mouth Spitzer look like a pom pom girl.

Starka's picture
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At least Spitzer will be an ineffectual governor in New York, as opposed to being a populist Attorney General who aspires to middle management.

ymh_ymh_ymh's picture
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That's true, he's another worthless regulator whose daddy put him thru college/law school then bought him every job he ever had since then. To be fair to Thomsen, Steve Cutler was even a bigger wimp than she is. He was head of enforcement at the SEC before Thomsen. A frat boy type.

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Oh my, a frat boy.

badmove?'s picture
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I vaguely remember sleeping w/ a Smith Girl when I was @ UMASS. It was fun.

ymh_ymh_ymh's picture
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Was it 30 years ago? If so, what was her name?
 
Sorry, shouldn't have asked you to kiss and tell.

badmove?'s picture
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19, man I'm getting old. 1 nighter.

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