12 of 13 people found the following review helpful:
5.0 out of 5 stars
If you're a small investor, this book will make you cry., July 8, 2008
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!
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10 of 13 people found the following review helpful:
5.0 out of 5 stars
A Work of Historical Dimension, September 7, 2006
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
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3 of 3 people found the following review helpful:
5.0 out of 5 stars
This is an eye-opener, August 14, 2009
This review is from: Wall Street Versus America: A Muckraking Look at the Thieves, Fakers, and Charlatans Who Are Ripping You Off (Paperback)
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
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