[PEN-L:32806] Re: applied cost benefit analysis

[Nomiprins@xxxxxxx]

In a message dated 12/5/2002 1:14:41 PM Eastern Standard Time, michael@xxxxxxxxxxxxxxxxx writes:

> Note that they pay modest fines compared to what revealing the
> information might cost.  Very intelligent economic behavior.


yeah - insignificant fines. This brings the sum of Wall Street fines for this recent period of bubble, fraud and bust to $213mln. To put that in perspective, the top 10 banks garnered $62bln in non risk fees.

> FIRMS FINED FOR NOT FOLLOWING E-MAIL RETENTION SCHEDULE
> The Securities and Exchange Commission has fined five major brokerage
> firms
> (Deutsche Bank, Goldman Sachs, Morgan Stanley, Salomon Smith Barney, and
>
> U.S. Bancorp Piper Jaffray) $1.65 million each for failing to keep
> employee e-mail for the required retention period. The SEC examines such mail to
> find cases in which brokers have rated stocks positively and given it a
> "buy" recommendation to the public, while in private correspondence
> revealed complete contempt for the same stock. The commission says, "The
>
> record-keeping rules are a keystone of the surveillance of brokers and
> dealers by commission staff and the security industry's self-regulatory
> bodies.


The SEC was absent from this entire 'surveillance' exercise until a few months ago. Besides, all the institutions above pay their analysts based on the transactions they close. As this current compensation period (2002) comes to an end, senior management is still asking analysts 'what business did you bring us this year?' Since it's been a rough year for the banks, that answer is more important to them than ever.

Nomi