Wall Street Really Is Out to Get You
Doc's note: No one is looking out for your wealth except for you. That's especially true if you're just an average investor...
Today, Vic Lederman – the editorial director at our corporate affiliate Chaikin Analytics – details how Wall Street is out to get everyday investors and what you can do to protect yourself...
Folks, I don't mean to sound too conspiratorial...
But Wall Street has it out for you.
I mean it. And we've recently seen yet another example of this.
Now, you probably didn't notice this one in the news. It barely got any attention.
And it resulted in a fine... which was barely a slap on the wrist.
But it's yet another clear example of Wall Street's true relationship with "retail" investors. And it's a stark reminder that for the Street, parting you from your money is more important than making you money.
So today, let's dig into exactly what happened... why it matters to you as an investor... and what you can do to protect yourself.
In January, the U.S. Securities and Exchange Commission ("SEC") announced that financial-services titan JPMorgan Chase (JPM) had agreed to an $18 million fine to settle civil charges.
Now, for a company like JPMorgan, $18 million probably doesn't sound like much. And that's because it's not.
JPMorgan reported managed revenue of about $132 billion in 2022. That makes the fine around 0.01% of its managed revenue. It's a drop in the bucket.
So what did this pillar of American investment banking do?
Simple – it wrote contracts telling its customers they couldn't report wrongdoing to the SEC.
I'm serious. One of the most elite banks in the world had a rule effectively saying that if it wronged a customer and credited or paid out more than $1,000 to fix the wrong, that customer was barred from reporting the wrong to the SEC.
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Folks, this is absurd.
JPMorgan was telling its customers what amounted to "Uncle Sam doesn't need to know if we hurt you. That's just between us."
Now, if you weren't born yesterday, this should be a huge red flag...
Anytime someone says, "let's keep this off the books," you should know that something potentially dangerous is going on in that transaction.
And yet, JPMorgan tried to get away with this.
Thankfully, the SEC eventually spotted the problem. And the $18 million fine, though absurdly small, was a public acknowledgment that this kind of behavior isn't in line with the rules.
But as investors, it should serve as a chilling reminder...
Wall Street is not on your side.
Remember, every day that you are exposed to the markets, you're competing against Wall Street. And you need to arm yourself with the best tools available in that fight.
For me, those tools include independent financial research and analytical tools, like the Power Gauge, that provide independent analysis.
This is the baseline. Not something extra.
Wall Street would greatly prefer you didn't "do your own research." In fact, we've seen directly that Wall Street would prefer you didn't look out for yourself at all.
JPMorgan seriously tried to bar its own customers from going to the SEC after they had been wronged. It's dirty, but that's the game the company chose to play.
And it's up to us to make sure we arm ourselves with the best information possible. Wall Street is only looking out for itself – not you.
Good investing,
Vic Lederman
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