Category Archives: Finance

The Pragmatic Prophet: Google Apocalypse?

Written and published on 25 September 2020 by Alice B. Clagett

Dear Ones,

THE PRAGMATIC PROPHET SAYS: Could be the East Coast internet will become separate from that of the West Coast, if United States federal government decentralization continues as I predict. It might be good to get financial records offline and onto a flash drive or onto CDs, in case the national versions of Google and HR Block online should begin to fail.

As well, I figure if I plan my day around non-internet activities, then Google outages may not be too important to me.

Link: “Google Services Go Down in Some Parts of the U.S.,” by Daisuke Wakabayashi and Michael Levenson, 24 September 2020 … in the New York Times … https://www.nytimes.com/2020/09/24/technology/google-service ..

–from Link: “The Pragmatic Prophet: Google Apocalypse?” by Alice B. Clagett, written and published on 25 September 2020 … https://wp.me/p2Rkym-kch ..

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Creative Commons Attribution-ShareAlike 4.0 International License

Except where otherwise noted, “Pragmatic Prophecy” by Alice B. Clagett …  https://pragmaticprophecy.com … is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0) … https://creativecommons.org/licenses/by-sa/4.0/ ..

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Google, telecommunications, communications, internet, government, United States, finance, social unrest, decentralization,

 

Side Trading of Stocks and Bonds: Broker-Client Conflict of Interest . by Alice B. Clagett

Written and published on 18 February 2020; updated on 12 June 2020
Previously titled: Question About Stock Brokerage Integrity and Hidden Client Risk

Image: “A Section of Midtown Manhattan in Daytime,” by user: AngMoKil, in Wikipedia … https://en.wikipedia.org/wiki/Architecture_of_New_York_City#/media/File:Pano_Manhattan2007_amk.jpg … CC BY-A 2.5

Image: “A Section of Midtown Manhattan in Daytime,” by user: AngMoKil, in Wikipedia … https://en.wikipedia.org/wiki/Architecture_of_New_York_City#/media/File:Pano_Manhattan2007_amk.jpg … CC BY-A 2.5

  • PUTTING SAVINGS IN BANKS
    • Potential Risks
  • INVESTING IN STOCKS AND BONDS THROUGH A STOCK BROKERAGE FIRM
    • Potential of Brokers Skimming Margin Cream
      • Question: Is This Type of Skimming Maybe Common Practice?
    • Possible Need to Liquidate a Client’s Holding without Their Knowledge: A Workaround Not in the Client’s Best Interests
      • The Temptation for Stock Brokers to Advocate High-Risk Instruments to Cover ‘Phantom’ Trades
    • My Question, and Why I Am Asking It

Dear Ones,

It seems possible to me there may be stock and bond brokerage conflict of interest with individual investors because of side trading by brokers. I say this because of experiences I had as an individual investor with a prestigious stock broker in years past. First some background regarding putting savings in banks, and then the question regarding side trading by brokers, and the ensuing conflict of interest …

PUTTING SAVINGS IN BANKS

If banks, say, take our savings into a savings account or CD, they are allowed to provide us a low rate of interest, and then they may invest that money in somewhat riskier ways, so as to earn our profit on the money we invest.

Potential Risks

The potential risk for the person who places his or her savings into a savings account or CD is the possibility of large-scale bank failures, as in the case of the Great Depression, when I recall my mom said people lined up on the streets trying to withdraw their savings from the banks, but were not able to because the banks failed.

These days, as I understand it, our bank savings are secured by the SEC or maybe FINRA, up to a certain per-person limit. That may mitigate the risk of large-scale bank failures … at least, up to a point.

INVESTING IN STOCKS AND BONDS THROUGH A STOCK BROKERAGE FIRM

Potential of Brokers Skimming Margin Cream

When we invest our savings in stocks and bonds, say, in a margin account, then it seems to me that the opportunity exists for the stock broker to benefit from our holdings in a way a little reminiscent of banks. For instance, might not the stock broker use our margin account to day trade equities or maybe bonds in hopes of skimming some cream off our account, with the client being none the wiser?

Question: Is This Type of Skimming Maybe Common Practice? Is that allowed, on Wall Street? Maybe it is common practice amongst stock brokerages, and I am not familiar with the practice?

This is the question I have: Do any of my readers know whether this skimming of margin cream is standard stock brokerage practice? If it is, then, I feel, there would be a potential broker-client conflict of interest …

Possible Need to Liquidate a Client’s Holding without Their Knowledge: A Workaround Not in the Client’s Best Interests

I know, from a year of day trading myself, that it is hard to beat the market through day trading. Sometimes, though, people get into the thrill of day trading, so much so that they do not want to look at the bottom line and find out for sure whether they bettered the market over the course of a year. Do you not feel this to be true?

I myself found, using the best software I could obtain, that after a great deal of work every morning, and plenty of thrills, I ended up with no profits (and no losses) at the end of a year.

The best of stock brokers intent on skimming margin cream would most likely know what I learned … that the chance exists that some of the client’s stocks would need to be liquidated because of a broker’s side traded margin deal gone south, unbeknownst to the client.

I remember in my mom’s time, stocks and bonds were actual pieces of paper that a brokerage handed to a client. Thus the client knew for sure what he or she owned; the stockholder or bondholder had the paper to prove it.

Today, however, investors often chose to leave their stock and bond certificates with their brokers. It is true, the investor can see on their monthly statement that they have such-and-such investments, numbered such and such. That, however, is the only proof they have that they have purchased and now own these stocks and bonds.

In a way, these stock brokerage statements are but figments; surely it might be possible, through sleight of hand, to sell some of the underlying instruments to pay off margin debt, without the client being wiser, the presumption being that similar instruments might be purchased, and their CUSIPs, for example, jimmied round, in the event the client wished to sell the (already sold) stock or bond, or to transfer the entire account to another brokerage.

In a sense, then, the stock and bond holdings of the modern-day brokerage client might be viewed as ‘phantom’ holdings. While possible, it seems to me such an approach to skimming margin cream might cause some last-minute sweat of the brow of the broker if the client were to decide to trade or transfer a ‘phantom’ stock or bond.

The Temptation for Stock Brokers to Advocate High-Risk Instruments to Cover ‘Phantom’ Trades. Here is a more difficult call from an ethical standpoint: The broker might wish to cover losses from ‘phantom’ margin trades by persuading the client to accept risky stocks and bonds that are likely to decrease in value. Then the risky instruments might be sold by the broker … while remaining as if held on the client’s statement … and the money from the sales used in ‘phantom’ day trading, with profit going to the broker, and phantom trading losses covered by the decreased cost of the broker’s purchase of the risky stocks as they go down in price.

What I am thinking is that the desire of stock and bond brokers to profit from ‘phantom’ trades might lead them to push very risky stocks onto a client, to cover the broker’s losses. In such instances, the financial interests of the broker would be opposed to the financial interests of his client, do you not think?

My Question, and Why I Am Asking It

I ask this because, in a stock and bond account I held a few years ago, I noticed that the annual statement of activity on the account apparently differed from the individual transactions listed online for the year. How could this be, I wondered? That is how with I came up with the above theory, and the above question.

I also recall being convinced by my then broker that purchase of Puerto Rico bonds was a low risk investment backed up by the buy recommendation of his prestigious stock brokerage. The bonds tanked in a spectacular manner.

What happened there, I wonder? Was it the broker who misrepresented the buy recommendation of the stock brokerage? Or could it have been that the stock brokerage itself was recommending risky stocks to individual investors, perhaps parlaying those recommendations against the inclinations of its savvy institutional investors to unload the Puerto Rico bonds. If either of these instances pertained, a conflict of interest between the broker or brokerage and the individual client would be evident.

The greater question is this: Could there be industry-wide abuse of a individual stock and bond client’s interests, as outlined above?

In love, light and joy,
I Am of the Stars

— from Link: “Side Trading of Stocks and Bonds: Broker-Client Conflict of Interest,” by Alice B. Clagett, Written and published on 18 February 2020; updated on 12 June 2020 … https://wp.me/p2Rkym-gvy ..

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Except where otherwise noted, this work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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finance, banks, banking, stock brokerages, stocks, bonds, economy, economics, disclosure,

Likely Upcoming Legal Reforms as a Result of ‘Disclosure’ . by Alice B. Clagett

Awakening with Planet Earth

Published on 4 October 2016

  • THE HIDDEN COST OF FRIVOLOUS LAWSUITS AGAINST FAMILY, FRIENDS AND CO-WORKERS
  • THE PROCESS OF ‘DISCLOSURE’ AT THE GRASSROOTS LEVEL
  • MURDER, STOCK BROKERS, AND THE LAW

Dear Ones,

Some say that American law schools today teach their students:

  • Do whatever you can get away with legally.
  • Look for loopholes.
  • If business is slow, look for ways to start frivolous lawsuits against your family and friends; find a way to hide your participation in these lawsuits, through, for example, a class action lawsuit.

But what does instigating frivolous lawsuits against friends and family really mean?

THE HIDDEN COST OF FRIVOLOUS LAWSUITS AGAINST FAMILY, FRIENDS AND CO-WORKERS

Since telepathy is going global these days, especially in family groups, and groups of friends and co-workers, what will take place is the process of disclosure … in other words, the whole family, all our friends, or all our co-workers will be aware of what…

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Amateur Sleuth: The Case of the Phantom Broker . by Alice B. Clagett

Awakening with Planet Earth

Written and published on 6 November 2019

  • URBAN LEGEND: THE PHANTOM STOCK BROKER
  • PHANTOM BROKERS: DAY TRADING WITH CLIENT STOCK ACCOUNTS LIQUIDATED ‘ON THE BACK END’?!
  • CRIME FAMILY URBAN LEGEND: CONFIDENCE GAMESTERS IN KEY ROLES NATIONWIDE
  • ONESIE-TWOSIE GAMBIT: SHEARING THE WARRING ‘SHEEP’
  • THE ‘ONSIE-TWOSIE’ AND THE ‘SHELL’ STOCK BROKERAGE ACCOUNT GAMBIT
  • POOF! THE MONEY DISAPPEARS!
  • THE WRAP

Dear Ones,

On the astral airs, I heard about the most ‘out there’ confidence game featuring the world of high finance, crime families, and subversion of the fiduciary responsibilities of those big-time players, the stock brokerages that are household names worldwide.

URBAN LEGEND: THE PHANTOM STOCK BROKER

Here is the urban legend: There are ‘phantom stock brokers’ who may steal the identities of legitimate stock brokers, by assuming their same name and taking over their accounts. When I heard the astral story, I asked myself: How might this be done?

After all, to…

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Notes on Forestalling Social Unrest in California . by Alice B. Clagett *

Awakening with Planet Earth

Written on 12 April 2018; published on 6 December 2019

  • THOUGHTS ON PROVIDING STAGE ONE WORK FOR THE CALIFORNIA HOMELESS AT LESS THAN MINIMUM WAGE, IN EXCHANGE FOR SOCIAL SERVICES
    • Prison Work Programs for Less Than a Dollar an Hour
      • Prison Release Work Camps.
    • A Stage One Consideration in Employing California’s Homeless at Less Than the Minimum Wage
  • THOUGHTS ON SLOWING THE SPREAD OF HIV AND AIDS IN PRISONS
    • On Isolating HIV-Positive Prison Populations in Cell Blocks, Together with HIV-Positive Prison Guards
    • Conjugal Visits
  • HUMAN TRAFFICKING OF IMMIGRANTS TO THE UNITED STATES, COMPARED TO THAT IN CHINA
    • How China Deals with an Influx of Minimally Employable People from North Korea
    • How the United States Deals with an Influx of Minimally Employable People from Mexico
  • CONCLUSION

Dear Ones,

I wrote up these notes in April 2018, with a hope that I would soon finish them off. More than a year later…

View original post 1,783 more words