Do AGs really “protect” the public? - Posted by DaveD (WI)
Posted by DaveD (WI) on April 25, 2007 at 16:08:10:
It depends. It depends on whether the AG is good or bad, competent or incompetent… and how politically expedient their crusade is. An out-of-control one will abuse his power, having unlimited resources.
Right now, a pretty well known RE guru has been accused of all kinds of wrong doing by his state’s AG. It’s a sad thing, and there is certainly nothing funny about it. Perception is reality in most folks eyes, so goes the feeling “where there is smoke, there is fire.”
Perception is reality with AGs as well. Much of what they do is put out for public consumption more so than public good. Don’t confuse the two! Good folks get hosed all the time. In an attempt to not beat that particlular RE horse again, here is another look at how these things rarely are what they appear to be, always have unintended consequences, and almost never achieve their goals with any real justice. The so-called pursuit of justice is nothing more than a smokescreen for “getting” someone. Usually someone successful. An elaborate way to conceal jelousy, if you get my drift.
A few months back the obnoxious former AG from New York (who will remain nameless here) acting as judge jury and executioner handed down charges against a Milwaukee fund manager (Strong Funds) for “market timing” by the principal (Richard Strong). Supposedly illegally benefiting himself. Didn’t have to prove it. And, it didn’t matter that no stakeholder ever lost a dime. It didn’t matter that Milwaukee is not in New York. It didn’t matter that Strong was incorporated in WI. It didn’t matter the AG was acting out of his jurisdiction. The only thing that mattered was because a symathetic judge said so.
It called for an outrageous fine and signing a consent decree. Sound familiar? I don’t remember the exact amount, but it was many millions of dollars. Well, Strong felt the best way to deal with it was to sign, and not drag the company down by fighting. After all, he had a fiduciary responsibility to his stakeholders. Ugh, that would be state pension funds, teacher retirement funds, etc. Folks who could ill afford to see their “sunset years” turn into a financial nightmare because their share values tank.
Only one problem. He didn’t have the cash to pony up to pay the fine. And the AG wouldn’t consider spreading out the payment. End result? No Strong no more. Had to sell out the company to a competitor (Schwab) to raise the cash. Who was damaged? How about 400 folks in Wisconsin who no longer have a job? Corporate headquarters is shuttered. Poof! A local corporation managing 42 BILLION dollars vanishes! Schwab now owns the funds. The AG got another scalp to hang from his belt. Another victory for the consumer? Not!
Strong was one of the good guys. Decent, honorable, and a benefactor to his community. Reminds me a lot of a RE guru I know. Someone I admire because he is willing to fight, knowing the deck is unfairly stacked against him.