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Re: Letter from Regional Investment Bankers Association
Chapman, Spira & Carson - Disscusion

From: Robert Spira
Date: 3/30/99
Time: 2:47:01 PM
Remote User:


Interesting situation and I can understand why you are confused. The basic problem in the securities industry today is the fact that an element has infiltrated the industry that is more interested in stealing money than running a legitimate operation. People are put into worthless securities by brokers controlled by criminals, where management owns literally all the stock (boxed) and as their telemarketers convince those that are about to fleeced to buy these securities these people unload. When the smoke clears, the investor's money is gone, the company is gone and the brokerage firm is gone. In many cases you can find those that set up the operation, taking early retirement on a sunny island in the South Pacific.

Not that there hasn't been a criminal element on Wall Street before, but lately, the situation has just become untenable. The innocent victims in most cases are the companies that are traded in these markets as the rules continue to tighten up to prevent more of the same from happening, in many cases it hurt innocent victims who for the most part are the companies themselves.

Effectively, what you received is a fairly accurate account of what is occurring and it is true that market makers don't want to be responsible for having to keep up to date with the stocks they trade. Trading is reflective and for the most part, you can do it or not depending upon your intestinal makeup, but the day you start trading based on how well or poorly the company is doing is the day they will take you to the cleaners.

Being thoroughly familiar with a stock that is traded has never been a requirement before other than for the first guy in. Filing the 15C211 has always been a great big pain the butt, but to have to not only file but to be responsible for the company's actions opens a new page in Wall Street's book.

Darn right, I wouldn't want to have the responsibility if I was trading the stock, or more likely, the head of the firm where the trader is trading the stock.

So, what happens next. I lot of companies are not going to get marketmakers to file for them under the new rules and if they don't, if no one is making a market, it will be just as though the earth had swallowed up the company with a big gulp. It will disappear from trading. No so good!

What do you do if you are a regulator? You are getting angry wires from congressmen, letters from the governor, you are pushed around by industry associations and etc. etc. In the meantime, poor people are getting separated from their money right and left. What do you do, tell the bad that what they are doing is wrong and to stop? Right!

Don't know the answer, but there are going to be a lot of angry people on both sides of the equation on this one and thank God I don't have to make the call. Sorry I can't give you an answer but at least maybe you understand the underlying motive behind what is going

Last changed: March 17, 2000