Dear FRONTLINE,
The Wall St. Fix settlement rapes the victimized American investor a second time with justice denied. Of a $1.4 billion settlement,investors who lost over $5 trillion dollars will receive 27.67% or $387.5 million. $512 million for independent analysts? Perhaps the same unemployed analysts responsible for investors' losses! States rake another $500 million and American investors comes in last place again!
Chump change- table scraps for billionaire CEOs like Weill and Lay whose individual net worth is greater than the settlelment!This settlement is as egregious as the billion dollars stolen by Ken Lay and Enron executives in the 5 years before Enron imploded and who have yet to be prosecuted. What a joke! Investors lost $68.8 billion on Enron alone.
The US Government is a system of legalized bribery and this settlement proves it. Until white collar criminals, like Weill, Ebbers and Ken Lay do hard time in prison, American investors are safer buying lotto tickets at a local convenience store than gambling on Wall St. stocks. Hear Grasso and Weill laughing?
Kent Calhoun
Hunt, TX
Dear FRONTLINE,
Thanks so much for an informative show, it really makes me glad that I support PBS. KERA here in the Dallas area I worked for MCI for over 11 years and though I left before it became MCI WorldCom, I still have a lot of MCI stock, not to mention retirement, and 401ksavings that is tied to MCI stock. While working at MCI, the company experienced periods of growth and then lean times. I survived 4 different layoffs before leaving the company. Even though there were tough times, I understood business cycles and did not feel resentment during the lean years at MCI. However, when the complete story of Bernie Ebbers and the CFO's wrongdoings surfaced, I felt physically ill. My husband another former MCI employee and I lost thousands of dollars in stock devaluation but we're relatively young and we'll get through this. I really feel for friends and former employees who were near retirement age and saw much of their savings just wiped out....all because people got greedy, very greedy. Thanks again for broadcasting such an informative show.
Tamara Sakuda
Allen, Texas
Dear FRONTLINE,
I enjoyed your report but wondered why you did not cover all the other CEO relationships and potential problems. Those of us who lost money on MCI-Worldcom already know most of what you reported. I have a few comments on specific issues:
1 I agree with the investor you interviewed that the recent settlement solved nothing and did nothing to restore investor confidence. Almost all the burden was put on the companies and therefore the stockholders, not the PEOPLE who were doing the damage.
2 I am offended that you let Arthur Levitt try to shed any responsibility. He was the head of the SEC during this period. It was his job to protect the investors from this sort of thing. My recollection is that he was spending the SEC's resources investigating day trading houses and internet chat rooms which were pumping penny stocks. In other words the chief cop had the police handing out traffic tickets while Fort Knox was being looted.
3 I am surprised that you did not followup with what has been going on with the Worldcom bankruptcy. Under chapter 11 everyone has rights except the shareholders. Worldcom went into bankruptcy with $85B in assets but recently wrote off $45B of that which was basically exactly all the shareholder's equity. How does the government allow our accounting standards to provide for such an obviously flawed balance sheet. The law that congress passed last year will not solve this fundamental problem which is so important to investors.
4 MCI will soon emerge from chapter 11 in great financial condition with a new highly paid CEO, many of the same employees with new valuable stock options and new profitable banking business for many of the same banks you discussed in your report as participating in the scam. Why should investor's trust such a system or the government's role in providing for such a process.
5 I really believe that the government should prosecute the Wall Street crowd to the fullest extent possible. We can replace all those guys and shouldn't be afraid that Citigroup for example will fail if Mr. Weil and Rubin are busy paying attorney fees for the rest of their lives fighting the government prosecutions.
6 I also believe that there needs to be new legislation that reforms the capital structure and governance of our corporations which will insure shareholder control and director accountability. I think the ending of the double taxation of dividends could be a part of that reform. It could play a role in changing corporate behavior but I also believe that the big institutional investors and mutual fund managers must also be made accountable. The large pension funds and mutual funds are representing small investors and have as much of a fiduciary responsiblity as the boards of the companies whose stock they purchase. Here is where the states and federal government have great influence. The taxpayers should not stand for large pension funds which are backed by the taxpayers to not play a leadership role. The people that run these also must be held accountable. Congress needs to provide the teeth required.
7 I totally reject the idea that the boards cannot do a better job or that they must transfer sizable portions of the wealth of the company to retain a competant upper management team. I spent too many years in the corporate world to buy this excuse and I don't believe that most small investors buy it either. What I see too often on the boards of companies is the professional director who is on several boards and a few charitable foundations. If you add up the compensation for all of these activities it comes to quite a nice living with no time to really understand the situation and unfortunately a yes person for the CEO. I was disappointed that your report didn't cover the Worldcom board. The hearings before congress more than adequately confirm my assertions. The depressing thing for investors is that this situation is the norm not the exception.
Steve Fix
Dear FRONTLINE,
This program following on the heels of last week's "Burden of Innocence" further illustrates the biased and unfair nature of our criminal "justice" system. A black man in California was recently sentenced to 50 years in prison for stealing a couple of audio tapes from a toy store - without any possibility of parole. In contrast the guys who were examined in tonight's program stole millions and even billions of dollars and yet they have not been criminally prosecuted, years after their crimes were committed. It is clear that the criminal "justice" system is set up to persecute the poor and minorities, especially Afro-Americans, and to allow crime for profit by the rich, white and politically powerful. The hypocrisy in the system is open and visible to the whole world and undermines our claim to be a democracy that should impose its social system on other countries. We need to put our house in order, rather than pontificating to other societies and assaulting them by warfare.
Barrie Taylor
Miami, Florida
Dear FRONTLINE,
I pose a rhetorical question to your viewers. If a sales person approached you with an offer to obtain free money and all you had to do to get it was give him a major portion of you savings, would you fall for such a scam? Not bloody likely.
Now let me alter the scenario somewhat by adding the following information. The media, both print and broadcast, laud the scheme as a sure fire winner and recommends that you jump right in and reap a fortune. Financial pundits cry "buy" even when the scheme is losing money before before your very eyes. Would you fall for such a scam? Obviously many have.
In some circles such a harangue would earn me the label of "anti-capitalist" and by inference anti-American. "The stock markets are integral to the nations economy," those great Americans with an interest in those markets would shout. Bosh and hogwash to such arguments say I.
Daily stock market activity is, at best, a zero sum game. [post IPO] No real money is ever gained or lost, it simply changes hands. Remember the sales person mentioned above? Dividends are miniscule or non existent. Comparable zero sum games are poker, chain letters and pyramid household products sales schemes.
The stock markets are a creations of speculators and gamblers who see a way to live the good life without meaningful work being involved.
If the markets are so integral, why is the economy on a slow but noticeable recovery while Wall street paper is losing value everyday? That there is a disconnect between the two is obvious.
Once a share of stock is issued by a corporation and the issuer has received the money from this initial offering the share takes on a life of its own. The share then floats in the market relying on buyers to bid up the price. That price is not determined by company performance but by bids in the auction called the stock market. Who cares if the original issuer has no earnings. What happens if the issuing corporation goes bust. The holder of stock is out of luck because common stock has no redeemable value in a bankruptcy court.
The spinners and hypers are always touting long haul stats for stock equities but if you need your money now and the market is down you are again out of luck. In comparison, a series E savings bond purchased in 1990 has doubled in value by this year and the cash value is always available when needed.
Imagine if you will, a meeting of a couple of Wall street boys plotting the sale of a new stock issue. If you listen closely you might hear them lifting a line from the show The Producers - "Never put your own money into the show"
paul hunter
wilmington, ohio
Dear FRONTLINE,
Put these men in jail. The damage that has been done goes beyond all the monies spent on our tax dollar efforts in the middle east in the last twenty years. It goes beyond the entire Iowa annual State budget! It is the biggest theft ever recorded and we just slap their diamond encrusted hands? Well, it's only money, after all. Tell that to Wyonzie Kraft. $32,000 may be throw-away money for a very few and obviously protected individuals but she may have a different story. The state of Iowa may also have a different take on it. Jail is actually too good. Where is the concept of corporate conscience? Har!
Michael Van Natta
Knoxville, IA
Dear FRONTLINE,
As a former MCI employee who was "bought" by WorldCom, I always wondered why I couldn't make the financial statements make sense to me....and I have a CPA and an MBA in Finance.
How ironic that I worked extremely hard to achieve what the Company demanded of me, only to find that the loyalty was not rewarded by integrity. And I'm but one of over 22,000 employees laid off in 2002 --- and more that followed in 2003.
Do I wish that I had taken the time to even further diversify and reduce my stock holdings, and to exercise my options when the stock was trading at $90+?
You bet.... but I was too busy working 14 and 16 hour days to manage to phone in the order to Salomon Smith Barney...
Thousands of former WorldCom employees are still unemployed, and many of those will exhaust their temporary unemployment benefits this month. There is a 501c3 charitable fund that provides financial assistance to these still unemployed former WorldCom employees. If you would care to donate, go to www.exworldcom5100.com/fund.php and read more about it.
The exworldcom group gave a great deal of research assistance to Frontline; if you found this expose' interesting, please make a donation to help those employees who not only lost their life savings, but also their livelihood.
Kate Lee
Dunwoody, GA
Dear FRONTLINE,
Anyone who is wondering why the stock market is now in the predicamant it is only needs to become aware of the outright fraud that was perpetrated on the unsuspecting investors.
Hearing the story of the Texas investor who lost not only his money but his trust was enough to turn my stomach and my confidence away from wall street.
It will take a lot more than hype from the networks to turn the market around. It will take integrity.
Jeanne Marie Black-Ferguson
Boston, MA
Dear FRONTLINE,
Elliot spitzer, I thought was helping the public. I think he played a game where he saved his friends by making a deal not to press any criminal charges.
I think the whole justice system needs to be fixed, so that people like spitzer dont give these no-criminal charge, passes to folks like these.
If they screw many people knowingly and willingly, they should go to jail.. no ifs or buts
Great show..
Jack Stone
charlotte , nc
Dear FRONTLINE,
I worked for Worldcom for several years as a sales representative. I am currently working for one of their competitors.
A small group of ex-employees documented our knowledge of the fraud and corruption in our office with local, state, and internal Worldcom authorities with no results. You can view the information on the Yahoo financial message board under Worldcom messages. Look for references to Cherry Hill, NJ office.
Andy McBride
Philadelphia, PA
Dear FRONTLINE,
What happened to the millions of dollars paid in penalties? Where does this money go? A future Frontline show?
Dave Wolfe
Mckinney, TX |
FRONTLINE's editors respond:
See our web site for information about he settlement/penalites and how individual investors can claim a share. |
Dear FRONTLINE,
Frontline tonight was very informative, especially since I've been an employee of Citibank/Citigroup for 14 years. I really do not like being associated with a cheese company and I hope Citigroup, Mr. Weill and the analysts CAN clean up their acts. The measly fine was NOT enough. Elliott Spitzer should have penalized the people involved. As they say, it takes ONE in this case, TWO bad apples .... Why don't they just get rid of the bad apples??? That's the right thing to do. So what if the stock plummets? I'd rather be associated with a company with high moras standards. Money should not be ranked first.
Now that Salomon Smith Barney has forever sullied its reputation, Citigroup recently renamed SSB. I wonder when Mr. Weill will change his name.
mary-ann tu
Dear FRONTLINE,
Thank you for Frontline.I am motivated to contribute to PBS for honest reporting not found anywhere else.
Eliot Spitzer and Robert Rubin were men I admired in the past.Not any more! Rubin only informed a select group of analysts about his knowledge of the phony valuations.Spitzer did push for criminal prosecutions.
The only deterent is jail time.Fines of $15 million is small change for these men.
Millions have lost confidence in our financial system because our public leaders have failed to act in decisive manner.
Jack Abarbanel
Pittsburgh, Pa
Dear FRONTLINE,
What is really amazing about Sandy Weill's role is that the signs have been there for all to see since the late 1970's!
His takeover of a small but prestigious firm I worked for at the time -- Loeb Rhoades Hornblower. Weill only wanted the lucrative Corporate Finance division of the firm, and his methods were indeed ruthless. If you weren't a part of this crown jewel, you either found no job in the new company or, more likely, suddenly found yourself even veterans of 20 years or more out the door, not even with enough notice to clean out your desk. Of course, thanks to the likes of Sandy Weill, then Michael Milliken and Ivan Boesky -- who destroyed another firm I worked for, Drexel Burnham Lambert, and finally William Harrison of JPMorganChase, I no longer work on The Street.
What I learned 25 years ago, what was common knowledge even back then, was that greed, ruthlessness and lies made a few people -- beginning with Sandy Weill -- obscenely wealthy, while loyalty, hard work, solid business knowledge were deemed of no value compared with getting a job done -- not necessarily well, but as cheap as possible, and with no regard for the law or common decency -- to the benefit of the very, very few. Along with the revelations of the '90s and the past couple of years, along with the life savings of countless ordinary people, have gone the jobs of thousands of good, solid wage-earners with an immense pool of business and system knowledge, never again to be able to earn the good and -- by comparison -- very modest upper-middle-class wages that are such an important factor in driving the American economy, as opposed to the tens of millions sucked out everyone else's pocket, and the economy, by Sandy Weill and the like.
Miriam Michel
Dear FRONTLINE,
As a former engineer for another bankrupt telecom company, its disappointing, to say the least, learning that people we believed in and trusted had such reckless, greedy and short-sighted agendas.
Such ruthless dishonesty sets a bad example as it undermines the integrity and values we rely on in many ways throughout our lives.
Because Frontline has taken this matter to the forefront perhaps there is hope that someday such activity will no longer occur.
To restore the public's trust those responsible need to take full accountability in a deliberate and visible way, find construtive and effective ways to repair the damage, even if that means resigning from their positions of trust and cooperating with authorities and they ought to be shown the full extent of the damage they've done to peoples lives, careers and familes as well. Falling short of that those who draft and enforce our laws might take swift and decisive measures to prevent abuse of the public's trust.
Jeffrey McNamara 
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