Avoiding financial scams

How do we avoid suffering these big financial scams?  Like the Bernie Madoff ripoff. People ask me that all the time.

Our regulators failed to protect us, they point out. They certainly did. They were armed with volumes of laws and regulations. They audited Madoff, and Stanford, and others who bilked investors. And they missed everything.

If the scammers outwitted the regulators, how do we stop the next group of crooks?

Maybe we could learn a lesson from something that takes place on a Dutch island in the Caribbean.

A few men with polished shoes, wearing ties and carrying brief cases walk down the street. News of their approach flies ahead of them at the speed of light. Everyone knows, these guys must be tax officials from Holland. They are the only ones who dress this way on this island of shorts and sandals.

Locals fear them because they are not local. They come from Europe. They cannot be bribed as easily as local tax officials. They don’t care if your cousin is related to a senior government official. They just want to check your books and bank records, period.

We might create the same effect by asking French security officials to do some of the work our SEC people do. We could return the favor and send our SEC guys to do the French investigations. The Brits could send officials to Germany. The Germans could send sleuths to Canada. The Canadians could check into matters in Britain.

These birds would automatically be more objective. They would not be so easily pushed around. The fact that the CEO is good buddies with Senator Whathisface would mean nothing to the French auditor. The fact that three guys on the board of directors play golf with the SEC boss would not impress the Froggies.

We know this sort of “outside investigator” can be effective. We use them with our businesses. A company will have its own financial people. They will audit the books to look for theft and malfeasance. Ahh, but then the company has to bring in auditors from outside the company. Those outside guys owe allegiance to no one within the firm.

But once in a while the outside auditors also miss things. That is because their contract, for auditing, is so fat with fees they don’t look as closely as they should. So with the fattest contracts we maybe should have French auditors do the work. Our auditors could audit the French companies. The Brits could audit German companies. And all that.

Do not scoff. This idea might very well work. What we have been doing has not. Just ask the thousands who lost millions to Bernie. They think SEC stands for Stupid Idiotic Bureaucrats. I know, I know. The E and the C don’t figure in the spelling of those words. But the folks who lost millions to Bernie figure the SEC idiots cannot spell any better than they can audit.

From Tom … as in Morgan.


For more columns and for Tom’s radio shows (and to write to Tom):  tomasinmorgan.com.

Today's Other Stories

© 2018 Snyder Communications/The Evening Sun
29 Lackawanna Avenue, Norwich, NY 13815 - (607) 334-3276
Create an Account Forgot Password Help
pennysaver logo greatgetaways logo
We're on Facebook