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Indybay FeatureRelated Categories: U.S. | Global Justice and Anti-Capitalism
My Loss: Whose Gain? A Case of Disappearing Stock
Where did the money go?
This article first appeared in the Huffington Post on 2 January 2013
WHEN I GRADUATED, my father gave me 15 shares of Schering-Plough stock. It seemed like a rock solid move. My father was getting older and appreciated the relevance of pharmaceuticals that could only get stronger as we baby boomers ripened into our golden years...
Several career changes later, I had lived all over the world, kissed under Tokyo cherry blossoms, endured the August heat of Dubai. Back in the west, I recently called the Bank of New York (BONY), where my shares were last seen.
I was told that when Merck & Co. merged with Schering-Plough in 2009, it had turned its shares over to Wells Fargo, the bank now managing Merck shares.
Wells Fargo did not agree. “That account number isn’t one from our system,” a Wells Fargo representative told me. “We have different account numbers.” The stock was not at Wells Fargo. “We must not have been able to get in touch with you over an extended period,” the representative explained.
SINCE WHEN is stock something that you have to check on every year? Stocks are touted as instruments that you put away and forget about while they grow.
Not so, the representative said. If the bank cannot verify your whereabouts, it turns the stock over to the government.
I do not have my stock anymore. Don’t tell me it just disappeared—poof. Who has the 'missing' money? Greedy bankers? The US government? The NYPD? Like the losses taxpayers are now struggling to replace, it went somewhere.
ESCALATING THE ISSUE, I was told that if I wanted to pursue it, I could pay $35 for a government search, whereas, the way I saw it, the bank was responsible for holding the stock for me until my retirement, and was therefore responsible for finding it. Stalemate.
This development should not have come as such a shock to me, considering that taxpayers are now being held responsible to pay for lawsuits that might arise should New York Police Department (NYPD) officers working directly for banks commit a crime against those very taxpayers.
Yes, on the ground on Wall Street, banks have, indeed, really hired the NYPD officers in a response to the Occupy movement. Through a mechanism called ‘the Paid Detail Unit,’ banks are employing armed NYPD officers in uniform, to serve banks’ interests, rather than as the “public servants” their uniforms and badges imply.
“Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power,” Benito Mussolini once said.
TOO DRY FOR YOUR TASTE? The protagonist in ‘Occupy’s first bestselling novel,’ Trading Dreams, experiences the candy-coated version of this phenomenon trading with the U.S. megabanks where the gambling is done in their own rigged casino. I show her getting set up as a scapegoat while watching where the money goes as the $1.7 quadrillion derivatives market takes its bets off the table.
The novel resonated with Amnesty International, since instead of getting married and living happily ever after, she gets arrested, saying, “They steal the money and throw us in jail.”
The fact that banks can hire uniformed and armed public servants and hand taxpayers the bill for potential legal fees raises a lot of questions.
FOR STARTERS, why is the $35 search fee burden placed on me when the bank loses my stock? Neither bank bothered asking me for my new address. Did they really turn the stocks over to the US government, or did they stuff them in a secret account?
And if taxpayers have to cover any lawsuits stemming from the illegal actions against taxpaying citizens committed by NYPD officers working for banks, one also needs to know where their pay comes from.
LOOKING AROUND, I didn’t have to scratch much to uncover the fact that customer money gone missing is an old tune in the financial industry. Known for plundering clients’ funds through ‘rehypothecation,’ financial services have gambled away clients’ money on things like enormous $6.2 billion Eurozone repo bets.
Maybe I should be grateful that my loss is meager compared to others, like the $220 million in customer funds gone ‘missing’ at a financial institution known as PFGBest.
Since the crisis of 2008, there have been many articles about where the money went. The most common myth is, If you lost money, somebody else did not necessarily win it because of price gaps.
Dale Jorgenson, an economics professor at my alma mater, Harvard, erroneously says that when confidence is drained out of a financial system, a lot of investors will decide to sell at any price, and a big chunk of that money you thought your investments were worth simply goes away.
POPPYCOCK. It only took me a week of trading at the stock exchange to figure out that if I buy a stock for $50, and it gaps down to $10 where I sell it, the $40 I lost went to the guy I bought it from. We are so intent on looking to the branches for the next fruit when we win, that we forget to look at the roots when we lose.
And if the seller had inside information before selling it to me at $50, that is when theft took place.
Professor Jorgenson says the amount of wealth in the world “simply decreases in a situation like this.” Wrong. The money changed hands. Who drove prices up in the first place?
What argument will they come up with to explain away the disappearance of the actual stock, now that it is no longer a question of price, but a grab of the physical contracts?
J.L. Morin is the award-winning author of “Occupy’s Frist Bestselling Novel,” TRADING DREAMS, also a #1 bestseller in 'Political Fiction' at Amazon, free from January 2-6, 2013 at Kindle. Pick up your book and come discuss it live on Second Life at 9 a.m. Pacific time, January 6th, 2013.