Customer Reviews

Wall Street Versus America: The Rampant Greed and Dishonesty That Imperil Your Investments

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I recently received a small inheritance, and bought this book for some suggestions on what to do with it. After reading this scathing account of how careless, and frequently criminal, Wall Street is with investors' money, I think the best thing to do with it is stuff it in a pillow case and throw it in the closet.
I looked at other reviews here to see if anyone in the know disputed any of Gary Weiss' claims, and, alarmingly, no one did. A former Business Week columnist, Weiss definitely appears to know his subject, and, more importantly, he adopts a tone that makes the book readable for a complete layman like myself. Though his style may occasionally come off as glib as facetious, he presents a view of Wall Street you are not going to get anywhere else, packed with information that pesents the world of investment as nothing more than an Old Boy's Club that simply doesn't care at all about you.

Brief list of things I learned from reading this book: The regulation and punishment of criminals on Wall Street is usually done by the very people committing the fraud, hedge funds don't behave any differently with your money than any other investors, boiler room scams are alive and well (not hounded out of existence by the SEC, as I believed) and "punishments" meted out for criminal behavior by the SEC usually consist of being asked nicely to stop it.
I can't recommend this book enough to anyone considering investing. I'm very glad I got it when I did. A Must Read!

One of the most controversial aspects of "Wall Street Versus America" by Gary Weiss is the author's assessment that SEC Chairman Arthur Levitt was not the champion of the small investor as the press made him out to be; that, in fact, he aided and abetted the abuses against the small investor by refusing to curtail the corrupt practices on Wall Street. Weiss' assessment of Levitt is tersely summed up in the opening pages: "Levitt presided over the worst abuses to descend upon Wall Street since the 1920s. He failed miserably at dealing with the problems that he did not ignore entirely, but he did a couple of things better than just about any recent SEC chairman in history - give speeches, and court the press."

And this is the crux of what makes "Wall Street Versus America" a work of historical dimension. Each of the Wall Street abuses detailed in the book, most of which continue to this day, were by themselves a fraud on the public investor. But together, they rendered Wall Street not a fair and efficient capital allocation system but an institutionalized wealth transfer system. No book has, heretofore, shown this so clearly. Wealth was sucked from the masses of little investors and transferred to the corporate and Wall Street insiders while the cop on the beat, the SEC, looked the other way.

I recently retired after 21 years on Wall Street, during which time I made numerous written appeals to the SEC, the Fed, and in GAO testimony to halt the same areas of corruption covered in "Wall Street Versus America:" the rigged arbitration system; the 1920s style creation of conflict-riddled mega banks/brokerages; the rampant kickback schemes with lofty sounding names. One word aptly describes the outcome of each of my appeals: coverup. Thus, I am not surprised that Weiss has borne the brunt of threats and backlash for this comprehensive and courageous work.

For those skeptics who can't believe that "Wall Street Versus America" is a keenly insightful and accurate portrayal of the corruption-riddled practices of the largest and most lauded financial system in the world, here's background to digest before you move on to the main feature: "Wall Street Versus America."

In a 1994 article by Business Week (4/4/1994: Beware the IPO Market) regulators had
the goods to clean up the systemic looting of American investors by bulge bracket Wall Street firms and their cronies. The article quotes Lynn A. Stout, professor of securities regulation at Georgetown University Law Center: "The IPO [Initial Public Offering] market is rigged. It's rigged against the average investor." The article goes on to define exactly how a "penalty bid" works. "This is a penalty imposed on brokers who flip or sell their customers IPO shares right after the offering. The practice, devised by a group of top Wall Street firms during Securities Industry Association meetings in the 1980s, is used by underwriters to help prop up the stock price of an IPO in the sensitive weeks following its issue. Brokers whose customers flip, risk having their commissions taken away, giving them an incentive to discourage customers from selling out." The article points out, however, that the Wall Street firm's institutional clients were allowed to cash out while the individual investors are left "holding the bag" and serving as a prop under the price of the shares.

Two and a half years later, the Wall Street Journal took up the issue of the penalty bid. (12/2/1996: Tough IPO Market Triggers Penalty Bids Against Brokers by Deborah Lohse) "Even though penalty bids are taken out of brokers' commission, many investors gripe that they are the ones being penalized, since their brokers exert subtle, or not so subtle, pressure on them not to sell their IPO shares while the penalty bid is in place."

One and half years later comes Michael Siconolfi and Patrick McGeehan in the Wall Street Journal, who decide to take the gloves off on this penalty bid issue. (6/26/1998: Big Institutions Can Cash Out Quickly; the Little Guy Can't Without Penalties) "It's one of Wall Street's best kept secrets: While securities firms allow big institutional investors to dump hot new stocks at their whim, often within hours or minutes of the stock's first trade, they try to persuade investors to hold on to IPOs, for better or worse." This article clearly points out that while the little investor continues to be fleeced, the SEC has its lens fogged.

It's now March of 2001. It's seven years since Business Week first tipped off the regulators and the Wall Street Journal reporters did everything short of filing the brief and buying the handcuffs. And there are no more hot IPOs. There are only drowning IPOs. Ron Chernow in the New York Times summed it up: "Let us be clear about the magnitude of the Nasdaq collapse. The tumble has been so steep and so bloody - close to $4 trillion in market value erased in one year - that it amounts to nearly four times the carnage recorded in the October 1987 crash." Chernow likens the NASDAQ to a "lunatic control tower that directed most incoming planes to a bustling, congested airport known as the New Economy while another, depressed airport, the Old Economy, stagnated with empty runways. The market functioned as a vast, erratic mechanism for misallocating capital across America."

This misallocation of capital, capital that should have been feeding American innovation to secure our economic future but went instead to build millions of miles of unneeded fibre optic cables or now bankrupt dot.coms while shifting wealth to such unprecedented levels of concentration in America as to threaten our democracy, can be placed squarely at the feet of Arthur Levitt's SEC.

That most of these practices continue unabated today means Gary Weiss needs to start work on a sequel immediately and that regardless of who is sitting in the oval office, there's likely to be a Wall Street crony at the helm of the SEC.

Pam Martens

If you have $100,000, you are not being viewed as a $100,000 client to those on Wall Street. You are viewed maybe as a $2,000 or $3,000-a-year client to your broker or advisor. To you, your money represents hard work over many years. To them, you are just a tool to make them money. Wall Street needs you more than you need them. Without you, they would not exist. If you learn how to invest yourself, you don't need them anymore. They, on the other hand, benefit when you are uneducated about investing.

This book exposes how the business of investing works. It really opens your eyes to the true reality. Wall Street is a place that many associate with getting rich. The authors says,

"Much of Wall Street is built on catering to that fantasy,"

"That's because fortunes are made on Wall Street by catering to your greed. Not a penny is to be made protecting you from Wall Street's greed. That's your job."

I recommend this book to all investors. It is better to get educated than be sorry.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

A readable one-volume compendium of the many ways Wall Street can deplete your investment portfolio, written for a mass audience without sacrificing details.

I found it to be well-researched and, though it has a strong point of view, balanced and fair in its presentation.

The book is critical of regulation and takes a surprisingly antagonistic view of former SEC chairman Arthur Levitt, which it criticizes throughout for everything from mutual funds to Entron. The book also castigates Levitt's successor William Donaldson.

I liked quite a bit this book's writing style, which was humorous and presented difficult subjects in an entertaining manner. The book contains one of the best explanations I have read so far of the mutual fund scandals, and goes beyond that to explain the various other ways mutual funds can rip you off.

Despite the light approach, this is not at all like Michael Lewis's books. Lewis takes a laid back attitude generally agreeing with the Street's way of doing business, while this tome is outraged. In its style and presentation it harkens back to the Washington Merry-go-Round books of Drew Pearson and Jack Anderson.

The author has done an excellent job of detailing exactly what the problem is.On the one hand , we have Main Street,which aims at producing real wealth,based on the production of actual goods and services;on the other hand,we have Wall Street,whose main aim is to NOT produce any real goods or services.Wall Street's aim is to manipulate the paper claims to real wealth in such a way that Wall street speculators( the former investment banking houses like Bear Streans , Lehman Brothers ,and Merill Lynch,etc.),can extract a paper profit without the production of real goods and services, by the use of creative accounting,securitization,and leveraged buyouts involving the private equity firms.

Weiss does home in on the problem.The problem is that the United States has not had a truly dedicated SEC (Securities and Exchange Commission)chairman since the years 1971-1973,when Bill Casey made sure that such speculation was snuffed out before it could get started.Every SEC chairman since Casey has been someone who essentially allows the Wall Street speculators to peddle their baloney .Weiss does an especially good job in exposing the pathetic tenure of Authur Levitt,who was SEC chairman during the Clinton-Gore years.There was,at best,minimal to no regulation during all 8 years from 1993-2000.The Wall Street speculators built up steam during the Clinton years.Both secretaries of the Treasury,Rubin and Summers,helped create the speculative economy that has now collapsed.

I have deducted one half of a star because there is no discussion of the work of Adam Smith ,J M Keynes, or Kindleberger.All three wrote important works which identified exactly what the problem was-speculation financed and engaged in by the private commercial banking industry and investment banks.Adam Smith 's ancient wisdom identified the problem back in 1776.Smith had an excellent understanding of the causes of the Mississippi and South Sea Island bubbles that ravaged the world back in the 1719-1721 time period.The banking industry and financial services sector must be very heavily regulated so that it is prevented from wasting and destroying the savings of its depositors by loaning out money to prodigals,imprudent risk takers,amd projectors[Keynes's speculators and rentiers from chapter 12 of the General Theory(1936)].Smith's advice is direct and all one needs to know.The fact that Smith's very straightforward advice is not followed means that people refuse to learn from history the fact that every speculative bubble in the past has deflated,bringing with it recsssion or depression paid for by the middle and lower income classes.

Gary Weiss' book is absolutely fascinating in the amount of dirt it uncovers and explains. After reading I became quite disillusioned of Wall Street professions and people that hold them. It really opens one's eyes to the amount of smartly disguised corruption and shady practices that Wall Street firms actively employ as part of their 'normal' business under convenient indifference of Securities and Exchange commission.

I would recommend everyone to follow Gary's blog.

The book was in mint condition, well price and delivered promptly. I definitely recommend the seller to anyone interested in trustworthy sellers. I would not hesitate to buy another book from this seller.

I'm just an ordinary investor who has been feeling like a piece of bait for the securities industry- until now.

I applaud you for Wall Street Versus America. Reading it made me realize that my concerns and suspicions are valid and that I'm not alone. Not only that, it provided the beacon I need to have the confidence to be aggressive with my questions, bold with my actions and to never again blindly follow the "advice" of a broker and never again exist only to have my portfolio's mission priority be to fill a broker's pockets ahead of mine. I am lucky to have learned this before Wall Street had a chance to ruin me.

I was fortunate to retire with a pension lump sum. When I started looking into how to invest it, I found the brokerage industry to be like the Big Bad Wolf licking its chops, just waiting to brainwash me and take my money. So, I left my broker and found another, then I left the new one too. After that, I sold everything and put my money safely into Treasuries and Money Market funds so I could take all the time I needed to get my act together. Then, I found your book, bought it and read it carefully. Life changed. Thank you.

Oh yeah, I said your book enabled me to be "bold with my actions". By that, I mean that I have already written to my congressman and to the chairman of the SEC to demand that Arbitration be made optional. I'm expecting little in return, or maybe some polite "baloney" but I'm not backing off. This absolutely feels like swimming up a waterfall, but it's a start.

Great book.

I bought this book after reading an excerpt in the Conference Board's journal "Across the Board," and was not disappointed. A very amusing read.

The "Across" excerpt concerned the New York Stock Exchange, which the author concisely disembowled in the most effective and amusing essay I've seen on the Big Board in quite a while. The rest of the book carries on in similar vein and quite admirably.

The book does get a bit dogmatic in pushing the efficient market hypothesis, which is hardly constructive from a professional money management standpoint. But Weiss clearly couldn't care less about the professional standpoint, in this book written for the layman.

It also contains a good analysis applicable to the current controversy concerning hedge funds and short selling. Weiss favors the latter and opposes the former.

Overall the book has a strong free market flavor, while its disdain for Bush Administration regulatory policies is likely to find favor with opponents of the current administration.

Go out to your favorite message board and click on a half dozen posts. Ignore the content, but remember the style. Got that in mind? Well, you can now understand what reading this book will feel like. Not to say that the facts are all that wrong, they are not. But after a bit, you get tired of the style. If I used that style to post this review, I am sure that the review would get rejected.

As for content, a lot is reasonably correct. For those who do notunderstand the market as a whole (and for those who have found it to be a hole instead), it is wise to remind them that brokers are called brokers because that is what you are after you use them. Efficient market hypothesis or not, the market is mildly positive sum game if the earnings brought on to the table by the companies are in excess of fees and loads extracted by the brokers and the mutual funds. Weiss does a good job of rubbing the readers nose in the fact that quite often those fees and loads are in excess of the earnings brought on the table. He also does a pretty good job of making sure that the "buy side" is in it to make money for themselves as is the "sell side". Last time I looked, the car manufacturers were out to make money for themselves as were the car dealers, so why this should be a revelation to anyone is a mystery to me, but Weiss does a good job of reminding people of this reality. His push for index funds is probably correct for most folks who do not have the time and effort to "mind mr. market" 12 hours a day. The exposure of the SEC as an orgainization that does not do much and is run by big egos that are self-promoting should not come as a surprise to anyone, but given the other reviews of the book it appears that it has done so. He missed a good shot at Breeden who is now running a hedge fund, but so be it. He also missed the chance to mention that Breeden presided at the "beer and pizza" meeting in which the hedge funds cut out the MCI preferred stock while they had no representation on the creditor's committee during the WorldCom bankruptcy. So much for being a Trustee of the court.

The discussion of the situations with "naked shorts" was something that is worth reading. Too often these unknown and somewhat mythological traders are blamed for everything from the decline in the price of a stock to ingrown toenails. An objective examination of the situation along with "Batty Patty" is long overdue.

The discussion of Yale endowment disclosure was a bit lame if you know anything about endowments, but he is correct in that some endowments go a bit overboard into the hedge fund area.

In all, if you have been in the market on any sort of professional level, nothing in this book will come as a revelation. However if you are the new "chump" at the poker game, I would suggest that you read this to understand what the rules are. The message board like presentation annoyed me, but I suppose some people will prefer that.