This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Obama Signals Green Light for Stock Fraud

This didn't get much attention in the rush to claw through the details of the Obama job plan. But Sam Antar, convicted felon and mastermind of the Crazy Eddie stock fraud, blogged about it the following day.

Antar, who navigated the Crazy Eddie stock fraud past gullible investors and clueless analysts in the 1980s, immediately recognized what this means: It's not a Democrat-Republican issue, but one of criminals versus investors. "Why White-Collar Criminals Should Thank President Obama and Congressional Republicans," goes the title of his blog post.

You don't have to be a reformed felon like Sam Antar to understand how dreadful this idea truly is. To anyone who followed the dreary history of microcap stock fraud as it gathered steam in the 1990s, this plan is breathtaking in its naivete. Investor ripoffs were rife among the smallest echelon of the equities market, with microcap offerings being ripe for exploitation by unscrupulous stock promoters.

While SEC registration was anything but a panacea, removing registration entirely for offerings in the $5 million to $50 million range greatly expands opportunities for private-placement fraud, a peril that I saw frequently during the bad old days of microcap fraud in the late 1990s.

Those days, by the way, were the era of Bill Clinton and his self-aggrandizing SEC Chairman Arthur Levitt, proving that incompetence in dealing with stock fraud is by no means a Republican monopoly. At one microcap brokerage that spun out of control in the early 1990s, Hanover Sterling, 12,000 investors were ripped off in sales of worthless stocks. While their aggregate losses were not as high as the ones that afflicted Bernie Madoff's victims, the amount of investor savings destroyed was, proportionally, often the same.

And mind you, Hanover dealt in stocks that were registered with the SEC. Had there been no registration requirement, the ripoffs of that era would have been even worse. What worries me about "crowdfunding" -- when it involves weakening regulation of the capital markets -- is that it is more than just shoddy rulemaking. What Obama did in his speech, and what his aides did in that White House blog post, was to adopt the Republican-Libertarian "regulation is bad" ideology, that the only way forward is to deregulate the securities market. The underlying assumption is that raising capital in the markets should be cheap and easy, that "red tape," as Obama put it, is bad.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs