Australia: White Collar Crime Paradise

basilio · 28 October 2014

Good thread to open Joe. Certainly well worth a discussion.

I believe what you are referring to are out and out frauds and/or extremely dubious business activity which makes a killing and offers no return to investors.

I can certainly see the point and have come across many examples. And in almost every case there has been no effective intervention by authorities even when alerted to the scam. It just seems too hard or no one will go there.

On a personal level I tried to alert ASIC on the PIPS scam from 2004. It was an very engaging con and I was concerned enough to track down evidence to show it was a scam, put it all in a neat package and ask ASIC to "take action" .

Nothing happened for months. In the end it did fall over but largely as a result of private investors chasing the principals. ASIC and other organisations jumped on the bandwagon when PIPS was already closed down

I asked the question then and repeat it again. "Why can't ASIC or similar bodies ask promoters of a scheme to present their documentation to show they have a legitimate business if they have reasonable grounds to suspect it's dodgy and if the answers are not satisfactory insist the scheme is closed down?"

PIPS would have failed in a heartbeat as would a hundred similar cons.

http://quatloos.com/people_in_profit_system_pips.htm

http://www.quatloos.com/cm-prime/cm-prime.htm Other examples

basilio · 28 October 2014

Excellent, totally unnerving article today highlighting how bankrupt financial planning practices are.

Financial planning has gotten beyond a joke

Date
October 28, 2014 - 12:15AM

Adele Ferguson

Mad As Hell: Financial planners

Shaun Micallef and his 'Mad As Hell' team take a look at financial mistakes of the past. Shaun Micallef's Mad As Hell Wednesdays at 8pm on ABC.

When comedian Shaun Micallef's latest episode of Mad as Hell did a spoof on the scandal-ridden financial planning industry it was a signal that the shenanigans had well and truly entered in the public psyche.

It comes as the wind-back of financial planning reforms, the so-called Future of Financial Advice amendments are expected to be debated in the Senate this week.

And it also comes just as the Australian Securities and Investments Commission agreed on Monday to intervene in a court case relating to the collapsed Great Southern managed investment scheme. The regulator's involvement based on public interest follows a request from a group of senators, including Bill Heffernan and Sam Dastyari, who last week said they had been inundated with complaints from investors worried about imminent foreclosures and who had lost a fortune when the scheme went belly up.

In other parts of the sector, thousands of Timbercorp victims are getting slapped with writs after the scheme collapsed leaving huge debts that the liquidator is calling in.

Unfortunately most of the problems in the financial services and advice sector don't seem to have sunk in to the federal government's psyche. Rather than trying to clean up the problem, it has opted for minimal change.

Read more: http://www.smh.com.au/business/comm...ond-a-joke-20141027-11chqu.html#ixzz3HPJ5zanp

basilio · 28 October 2014

A couple of points to expand on how difficult it is to convince authorities of financial scams with even the most stringent evidence.

Bernie Madoff ran one of the longest and biggest scams in history. And yet there were many independent signals that should have resulted in far earlier action. I did remember reading Harry Markopolous story on how he determined mathematically that Madoff was a fraud and attempted to get the securities commission to take action.

He wasn't alone.

Investment scandal
Main article: Madoff investment scandal

Concerns about Madoff's business surfaced as early as 1999, when financial analyst Harry Markopolos informed the SEC that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. According to Markopolos, he knew within five minutes that Madoff's numbers did not add up, and it took four hours of failed attempts to replicate them to conclude that Madoff was a fraud.[68] He was ignored by the Boston SEC in 2000 and 2001, as well as by Meaghan Cheung at the New York SEC in 2005 and 2007 when he presented further evidence. He has since published a book, No One Would Listen, about the frustrating efforts he and his team made over a ten-year period to alert the government, the industry, and the press about the Madoff fraud.

Although Madoff's wealth management business ultimately grew into a multi-billion-dollar operation, none of the major derivatives firms traded with him because they did not believe his numbers were real. None of the major Wall Street firms invested with him either, and several high-ranking executives at those firms suspected he was not legitimate.[68]

Others also contended it was inconceivable that the growing volume of Madoff accounts could be competently and legitimately serviced by his documented accounting/auditing firm, a three-person firm with only one active accountant.[6

http://en.wikipedia.org/wiki/Bernard_Madoff

http://lp.wileypub.com/Markopolos/
Excellent overview of Harry Markopolos book. Take 2 minutes to hear the sort story. Chilling..

Julia · 28 October 2014

Knobby22 said:
Now people have lost faith in the banks, it will be a lot harder for them to win it back, especially since there are no laws protecting the sucker er customer being fleeced er advised.

Yes, I was thinking about that after I'd posted this morning in terms of the disservice done to itself by the financial planning industry. Of course, it's not fair to tar the whole industry with the actions of a few, but again the public - without enough knowledge to be able to evaluate advice offered - will probably choose to stay away.

basilio, you make a very valid point about the apparent impotence of the regulator. Yet another reason not to trust that, if you get yourself into something dodgy, you can expect any timely intervention from ASIC to save you. Even if eventually they take action it's usually too late and your money is gone.

Knobby22 · 29 October 2014

Julia said:
Yes, I was thinking about that after I'd posted this morning in terms of the disservice done to itself by the financial planning industry. Of course, it's not fair to tar the whole industry with the actions of a few, but again the public - without enough knowledge to be able to evaluate advice offered - will probably choose to stay away.

It will help some of the independent advisors who advertise they do not take commissions. They have recently formed an association where members only get paid on advice offered, must have a track record over a number of years serving the public with no bad happenings and must have completed a number of real courses.

I predict that this group will gain traction over time under the current laws as people desperately search for intelligent and uncorrupted advice. maybe this will force Macquarie, CBA etc. to lift their game. What scares me is that according to today's Age many of the advisors who were part of the scandal for that bank are still in the bank and some have been promoted!

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