By DAVID MOON, Moon Capital Management
Could someone please show me where the line forms to pick up my free
money? Everybody else seems to be getting some, or at least trying.
I just want to know where I go to apply.
Copying the success of individuals and lawyers, the states are trying to
balance their budgets with funds from tobacco companies. Money that was
supposed to pay for anti-smoking education is, instead, being used to operate
prisons and fund economic development efforts.
When people discover that McDonald's coffee is hot or that french fries are
fattening, it's time to get a lawyer and enter the free money lotto.
People don't even expect to pay to go to the dentist any more; some ubiquitous,
yet unseen insurance company is supposed to foot the bill.
Tennesseans salivate at the prospect of a state lottery, either because they
expect to exchange their ten dollar lotto ticket for a $100 million grand prize
or their kids will get free tuition out of the deal.
Everyone wants something for nothing.
The recently announced settlement between ten Wall Street firms, the New York
attorney general and the Securities and Exchange Commission proves the
Elliot Spitzer, the attorney general of New York, accused Wall Street
research of not really being research. Analysts couldn't say what they
believed about the companies covered in these reports or their employers would
never get any (much more lucrative) investment banking assignments from the
subjects of these reports. As a result, Wall Street firms seldom, if ever,
issued 'Sell' recommendations on stocks. 'Hold' meant 'Sell.' 'Buy'
meant 'Hold.' 'Strong Buy' meant 'Maybe Buy.' And 'Super Duper
Aggressive Buy' meant 'Really Buy.' The beauty of this system was that
everyone in the investment industry knew the true meaning behind these code
Attorney General Spitzer argued that it was the small individual investors
who were hurt by this system, because they didn't know the secret code to
decipher the recommendations. Thus was born a $1.4 billion settlement
pool. Some portion of this money will be paid to individual investors who
relied on Wall Street reports to buy certain high-tech stocks and were mislead
by these supposedly evil analysts.
The settlement is suppose to compensate
the little guy, the investor who never knew how the game was played.
Guess who also wants some of the settlement money?
Mutual fund giant Janus.
Janus proudly heralds things like their 'intense research and detailed
financial modeling' and 'rigorous fundamental and quantitative analysis.'
Their television ads tout their visits to companies to determine their true
And now Janus claims their fund managers didn't understand the difference
between a Wall Street 'Buy' and 'Hold' recommendation? Come on.
Remember that the next time you see an ad promoting the intense Janus research
process. If Janus really was a victim in the great Wall Street research
scandal, they should be too embarrassed to admit it. But there no longer
seems to be any shame in doing whatever it takes to get free
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).