In June 2009, I went to DC to meet with Senator Corker, the SEC, the Senate Banking Committee, the FDIC, the Congressional Oversight Panel and the Public Company Accounting And Oversight Board. I provided a report on corporate disclosure transgressions (request access to this report via firstname.lastname@example.org) that detailed over twenty problem areas in the corporate financial system. The report references specific cases, with excerpts from the original 10Ks, of companies violating or stretching disclosure rules. None of the issues I highlighted were caught by the SEC.
My pitch was simple:
Click here for a copy of the presentation used in all my meetings.
My presentation focused how to improve the integrity of the capital markets most efficiently. As detailed in my letters (#1 and #2) to Senator Corker, my purpose was to provide our political decision-makers with a powerful tool to combat stock market manipulation and Wall Street propaganda.
I pointed out that not only were companies able to manipulate the accounting system, but also that violation of accounting was rampant and undetected. For example, as detailed in our Corporate Financial Disclosure Transgressions, over the last 5 years we found 10 companies whose income statements do not add up correctly and 20 companies in the last 11 years whose balance sheets do not balance. I’d say that is proof that when the cat is away the mice will play.
Having worked on Wall Street for several years, I know how the “sausage is made”. I explained to everyone I met in Washington that New Constructs can immediately provide the public with additional information on the true profitability and valuation of companies that would empower investors to make more informed decisions. Just suggesting they provide an alternative to the home-spun Wall Street research.
I do not believe that most investors make bad investment decisions because they are stupid. They make them because they are misled about the true profitability and valuation of companies.
Wall Street’s money machine buys influence and drowns out the dissenting voices.