The attorney showed up at the investor's front door before noon. He was accompanied by two men in suits and tinted glasses.
The attorney was no stranger. He had telephoned and emailed the investor numerous times. He had quietly warned him not to speak with the media. The attorney didn't appreciate the investor's language. That word, "scam," after all, was just another way of saying the brokerage had committed a crime, and the investor might have a hard time getting his money back if he using that word.
"You do want you money back, right?" the attorney said, leaning on the door jam. The two men in suits said nothing.
"Right," the investor said. He had placed his cash in a money market fund that was sold as completely safe, liquid, better than Treasury bonds, Triple-A rated; the next best thing to heaven -- until the brokerage pulled the plug and informed the investor that his money was "frozen."
"Okay," the attorney said. "Let's talk."
The investor invited the attorney into the hallway. "But those guys," he said, motioning to the suits, "they stay where they are."
The attorney got straight to the point:
"If you ever want to see you money again, keep your mouth shut," he warned.
The investor had been in touch with his state attorney general, his congressman, the Securities and Exchange Commission, and the Financial Industry Regulatory Authority. He was getting nowhere and he was frantic. He had taken the prescribed steps to regain his cash, and the attorney's employer was displeased by all the "noise" the investor was making. It was hurting the company's reputation.
"You want me to shut up?" the investor fumed. "I've got cancer, and I'm near broke. Where's my money?"
"We're having a liquidity problem," the attorney replied. "You have to understand our position."
"Cancer," the investor repeated. "That's my position."
The attorney leaned forward. "Right, I understand," he soothed. "But the situation will change, eventually. For now, you're only making matters worse for yourself."
"By contacting the regulators?"
"That's right. Keep it up and you'll be last on the list. I'm just saying--"
The investor felt his fever rising. "Get out of here," he said, opening the door.
The attorney shrugged. "Okay. Only think about what I've said." He walked out, the pair of suits following him to a Lincoln Town Car parked at the curb. The investor slammed the door as the car pulled away.
It's been nearly three years since that meeting took place, and the investor still doesn't have his money. His cancer, however, has progressed and he may need to sell his home to pay for treatments.
He is only one of thousands of victims of the auction rate securities scandal -- the $336 billion money market rip-off that is still being fought over and litigated by tens of thousands of investor/victims. The investor described here is only one of many who have been threatened by their brokerages and banks.
I have been involved in pursuing this massive deception, and have managed to help investors regain $200 billion after the market pulled off a scripted failure in February 2008. But $136 billion is still in the hands of banks and brokerages who refuse to make investors whole and who are not above threatening them.
Does this seem like hyperbole? Do you believe Wall Street is too elite to use the tactics of common thugs? Well, think again. The threats are coming more often now. My email box is filled with dark stories of late night phone calls, foreboding letters, and howls of fear and anger from investors who have been warned: Shut up, stay away from the media, or get used to being broke.
I can't publish the letters and emails because the affected investors would have to reveal themselves and suffer the consequences. But time is growing short. The desperation is deepening.
It's long past time that fairness and civility came into play. These are not Wall Street virtues; we are dealing with an industry virtually devoid of ethics. Still, there comes a time when even Wall Street is forced to join the rest of us, even if only long enough to clear up only one of its most egregious scams. Think about it, Wall Street. Fix the auction rate securities fraud and then you can go on with business as usual -- cheating your clients and paying off your Washington enablers.
Time is growing short.