General Discussion
In reply to the discussion: David Sirota: Leaked Docs Show How Wall Street Extracting Massive Fees from Public Pension Systems [View all]haele
(12,720 posts)Corporate misrepresentation, or other actions with an intent to unduly profit on the vulnerable, is not considered theft.
Unethical Financial and investment vehicles developed to blow up in the investor's face while providing maximum profits for the organizations that developed them is considered similar to the model of Caveat Emptor - the "If I found out you came into $100K, I could walk in and offer to sell you a Porsche; you don't need to buy it" school of thought. The assumption is that everyone that has $100K is the same; whether it is a highly driven hedge-fund manager who makes close to 7 figures a year and that $100K is a quarterly bonus, or it's the no better than average high school grad comfortable living paycheck to paycheck in Podunkia, who just came into $100K windfall.
Similar to pension and retirement funds; the average person, even the average accountant or "budget manager" is used to dealing with current or short-term gains and losses and may still miss fine print on the bottom of page 32 of the prospectus that says "we will assess between 1% to 3% of any gain depending on size of account in accordance with chart 4.b.12 (Value Determination of Account Categories) that will be assessed prior to any disbursement before taxes as a cost-of-money handling fee on that gain". (And yes, I have seen that written in small print on a MLM "retirement vehicle" one of those luckless co-workers was trying to sell me after work...)
Too often the amount of information on little indeterminate fees that is often "mistakenly" left off the cost breakdown table or gathered together under one happily unhelpful "potential assessment fees" category that can't be nailed down. Yes, the corporation that is selling the fund will get a slap on the wrist once the "mistake" is identified or their potential fees schedule is shown to be wildly under-rated, but in the meantime, they have skimmed millions of dollars off the backs of people who's upper limit financial understanding is at best how to use an amortization calculation in an Excel spreadsheet.
There's often some masters/doctorate level math going on in financial instruments; and most people don't have the background or the time to get the background just to understand what these yahoos are selling.
While pushing an inappropriate financial product can be prosecuted as financial abuse of the elderly or the recognized mentally challenged, it's not considered abuse for people who fall under the category of "not experienced enough" to recognize a confidence artist that has enough legal knowledge to not step over the regulatory line between "poorly thought out advice" and "misdirection or withholding information with intent to unduly profit".
So, when in reality does "undue profit" become theft from the average person rather than theft from the mentally incompetent? When does the intent to mis-direct and suck as much money from trusting "fools" or "rubes" that are not yet elderly become theft or racketeering?
What level of profit is allowable before it becomes profiteering or outright theft? This isn't just about funds, it's about accepted practice of making huge amounts of money off percentage fees off externally developed awards or gains that after a service for access to a market or source of gain has been rendered.
I have no problems pay a fee for setting up an account and access to that market, or paying an equatable percentage for the management of my money in that market; I do, however, have issue with paying a lot of little additional fees just for "monitoring" or "activity" or to even to access my money and my gains; that management percentage should cover pretty near all the fees I would ever accrue. Especially since if I'm losing, the company that is handling that money doesn't scale back the fees they are charging me.
They are taking responsibility for investing my money, or acting as my agent, and they made the mistake or miscalculation with my money. But even when they make a mistake, they aren't liable even if they bankrupt me.
"Sorry, the market turned and we lost most of your money. Too bad for you the loss ain't equal. We aren't going to eat this just because you don't have enough money left over to pay us; we're in business to take care of the shareholders first and provide a service second. We get our money first, you get whatever's left over or you owe us".
As resources to live comfortably decrease, it's all about gambling for a big payday to fund a retirement that is beginning to cost the average person over a million just to be able to pay for an additional 25 years to sustain them, their health, and household after they can no longer bring home a living wage paycheck. People can say all they want about "well, should have planned for the future", but even in the bad old days, "the future" was a difficult thing for most people under thirty to grasp while they were trying to figure out what they had to do in "the now".
That is where the majority of profiteering, and frankly, potential theft comes in - the period the average person discovers mortality and that they can't depend on a legacy to provide for them when it comes time for them to retire...
It's one of those situations where so long as the regulations are lose enough that "it's legal", you're going to see a lot of gambling with other people's money and skimming off the top.
Haele