Let Them Eat Lettuce
HereÃ¢â‚¬â„¢s a special story about a big payday. Richard Strong, formerly of Strong Capital Management Co., will receive 85 percent of a sum estimated to be between $400 million and $700 million. ThatÃ¢â‚¬â„¢s a lot of lettuce.
For those of you who donÃ¢â‚¬â„¢t follow the business pages, last week Strong sold his company to Wells Fargo at this fire-sale bargain rate, leaving poor Richard with only several hundred million. Alas, the company was down in value from an estimated $1.5 billion just a few months ago on account of the recent unpleasantness over StrongÃ¢â‚¬â„¢s habit of making Ã¢â‚¬Å“market timingÃ¢â‚¬ trades, the root of the current scandal over mutual funds.
According to the Securities and Exchange Commission, Strong made 660 such trades in the past few years for himself, family and friends. StrongÃ¢â‚¬â„¢s problem is that he was a slow learner. According to The Chicago Tribune, Ã¢â‚¬Å“The SEC complaint said that Strong employees, including Strong himself, were repeatedly warned by company officials not to frequently trade the funds. After being confronted by in-house counsel in 2000, Strong promised to stop the rapid trades, but continued doing so with even greater frequency, according to the SEC and the New York attorney generalÃ¢â‚¬â„¢s office.
Ã¢â‚¬Å“Additionally, the Strong company let a hedge fund, Canary Capital Partners LLC, frequently trade its funds to win an investment from Canary, the government agencies said. Strong officials also failed to disclose the company ownerÃ¢â‚¬â„¢s trades and withheld documents for months from investigators.Ã¢â‚¬ Well, darn it. So Strong and the feds reached an agreement with the SEC and New YorkÃ¢â‚¬â„¢s attorney general, Eliot Spitzer: Strong personally will pay a $60 million fine, and the firm will pay another $80 million, as well as reducing investor fees by $35 million. Those would be the investors who lost money, but they wonÃ¢â‚¬â„¢t be able to sue anyone for it, because Wells Fargo bought the company under a deal where they have no liability for its record.
Also, Strong and two associates have been banned from the securities industry for life. Aw. And they made him apologize. Yeah, a written apology saying he is sorry was part of the deal.
As syndicated columnist Chuck Jaffe observed: Ã¢â‚¬Å“His words had all the warmth and sincerity of a pro wrestler trying to say nice things about the slob who just kicked his butt. The apology felt as staged as one of those wrestling matches.Ã¢â‚¬
No criminal charges, of course, because ripping off a lot of little people for millions is not a crime in this great nation. But see, hereÃ¢â‚¬â„¢s the beauty part: Strong will be able to pay his $60 million fine with no sweat, and heÃ¢â‚¬â„¢ll have lots left over. According to the papers, it is unclear how many of the 1,075 employees at the company will lose their jobs after the sale.
DonÃ¢â‚¬â„¢t you just love these heartwarming stories of adventurous, risk-taking pioneer capitalists?
Despite all the fine work George W. Bush and Co. are doing to convince Americans that the economy is tickety-boo and double jump-up jim dandy, for some reason many Americans remain stubbornly unpersuaded that things actually are getting better. Perhaps that would be because theyÃ¢â‚¬â„¢re not getting better for most people. What, am I so ignorant I donÃ¢â‚¬â„¢t know that weÃ¢â‚¬â„¢ve officially been in an economic recovery since November 2001?
Well, yes, but this is a funny recoveryÃ¢â‚¬”quite droll, really. According to a report for the Center for American Progress by Christian Weller and Radha Chaurushiya: Ã¢â‚¬Å“The distribution of economic gains is upside-down in this recovery, compared to previous ones. Profits received a larger share of national income than wages. Hence, profits soared to new record highs amid the first Ã¢â‚¬Ëœjob lossÃ¢â‚¬â„¢ recovery since the Great Depression. Adding to familiesÃ¢â‚¬â„¢ woes were rapidly rising costs; housing education and medical care jumped at double-digit rates in recent years. To maintain consumption levels, many families borrowed more. However, the debt is taking its toll. Families are being squeezed as they have to repay more and more debt, while the labor market is still trying to find its foothold. Many households lose this struggle and default on their loans, leading to serious ramifications for the economy…. For the first time in a recovery, the share of additional income that has gone to corporate profits is greater than the share that has gone to employee compensationÃ¢â‚¬”i.e., wages and benefits.Ã¢â‚¬
And let me point out that the reason weÃ¢â‚¬â„¢re in an Ã¢â‚¬Å“economic recoveryÃ¢â‚¬ is because of increased worker productivityÃ¢â‚¬”we work harder, they get the money.
Folks, this is what the Bush administration is really about. While weÃ¢â‚¬â„¢re all distracted with 9-11 and the war on terrorism, it is steadily making this country less fair and making life harder for most citizens. How long are you going to put any credence at all into what they tell you?
Molly Ivins is a nationally syndicated columnist. Her new book with Lou Dubose is Bushwhacked: Life in George W. BushÃ¢â‚¬â„¢s America (Random House).