Today's Outrage: Watchdogs Fail Dendreon, Citi Investors
Where are the regulators? What are they doing to protect the individual investor from the abuses of a market gone haywire and a big-footing government that is stomping on shareholder rights in the name of national economic security?
The checks and balances have been discarded like unwanted lint found in the empty pockets of our politicians and corporate leaders.
Consider what happened to
Dendreon
(DNDN)
investors this week. The shares
lost half their value in a single minute
on Tuesday, just before a big announcement about the success of clinical trials for its cancer treatment
. The rebound was equally swift after the good news. The
Nasdaq
took a quick look and decided to let all the trades stand -- and most incredibly, the Nasdaq announced that its decision is not open to appeal.
As a result, the Nasdaq earned a place among the
Five Dumbest Things on Wall Street
column written by TheStreet.com's Gregg Greenberg every Friday.
The
NYSE
is no better. Not too long ago, the NYSE decided to allow
Citigroup
(C) - Get Report
to
and push through the conversion of preferred shares (including a big chunk held by the U.S. government) into common stock, which will considerably dilute the value and control of individual investors in the bank.
General Motors shareholders must be feeling defeated as well, since they'll end up with a meager 1% ownership as bondholders, unions and the government divvy up control of the carmaker under the current reorganization plan. Are stock investors getting any say? No matter. They'd get nothing in bankruptcy so I guess they should be happy that they'll get anything at all.
In all these cases, the U.S.
Securities and Exchange Commission
remains AWOL.
The best one can assume is that the
SEC
doesn't want to interfere with the independence of self-regulatory bodies like the Nasdaq and NYSE. (Certainly it doesn't have the mettle to argue with the White House.)
But if the concern is about the independent regulators, then the SEC must be blissfully unaware of the double standard this creates.
Where was the respect for independent regulators when government leaders, the
Fed
and members of Congress pressured the Financial Accounting Standards Board, or FASB, to
and allow banks to revalue bad assets at whatever amount they think they might be able to sell them for in some fictional future rather than what they could get if they sold them now? That's the so-called "mark to market" rule that caused such a kerfuffle.
The poor FASB wasn't given much choice in the matter. The powers that be decided that it was in the best interests of the nation to allow
Bank of America
(BAC) - Get Report
,
JPMorgan Chase
(JPM) - Get Report
,
Wells Fargo
(WFC) - Get Report
,
Goldman Sachs
(GS) - Get Report
,
Morgan Stanley
(MS) - Get Report
, etc., etc., to prop up their balance sheets by randomly assigning new value to assets that had pretty much no value the day before the rule change.
Did anyone wonder about the sudden swing to profits at many of these banks in the first quarter from massive losses in the fourth quarter? Look closely at the earnings reports and balance sheets and you'll find the mark-ups on distressed assets.
Nothing is real. No one is accountable. The rules of the game bend and bow in the political wind.
And we wonder why investors are spooked and the markets are so jittery.
Hall is the editor of
TheStreet.com
. Previously, he served as deputy editor and chief innovation officer at
The Orange County Register
and as a news manager at
Bloomberg News
in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at
The Journal-Gazette
in Fort Wayne, Ind. His work also has been published in a variety of newspapers including
The Wall Street Journal
,
The New York Times
and
International Herald Tribune
. Hall received a bachelor�s degree in journalism and political science from The Ohio State University and has taken graduate management science courses at Boston University.
