The Dodd-Frank legislation has the American taxpayer spending millions of hard earned dollars to babysit the side-bets of five major derivative banks. We will work to change that.
Dollars are being wasted researching "a fiduciary standard" for brokers, when Wall Street knows full well there is no regulatory mechanism to enforce this standard.
What deters criminal behavior and recidivism? Enforcement of existing laws. Congress has a long history of passing securities laws that are not enforceable due to ambiguity. Wall Street has a long history of "regulatory capture." We seek to change that.
Time Line of The Derivative Project
Prior to the collapse of Bear Stearns on March 16, 2008, The Derivative Project launched the first caucus at a State Convention to focus on evolving issue of the collapse of the financial system and what protections are needed for retail retirement accounts.
The Derivative Project warned a major money management firm to move retail retirement investor assets to cash or FDIC insured CDs for five years at 5 % to protect their assets from a potential collapse of the equity markets. This money manager refused to investigate The Derivative Project's concerns. The SEC refuses to investigate this breach of fiduciary duty by this major money management firm.
The Derivative Project worked with a Congressional Candidate to raise awareness of the need for Congress to take immediate action to unwind the counter party credit risk at AIG to protect a collapse in the financial system.
The Derivative Project meets House Chair Nancy Pelois at a fundraiser for a Congressional Candidate in Minneapolis and asks for immediate action on controlling the systemic abuse with credit default swaps. Chair Pelosi refers The Derivative Project to Congressman Collin Peterson, Chair, House Agriculture Committee, who is spearheading the efforts to regulate OTC derivatives in Congress.
The Derivative Project provides written testimony in the House Transparency Act of 2009 requesting Congress investigate the use of taxpayer funds for collateral calls on credit default swaps between AIG and Goldman. Congress does not respond.
The Derivative Project is launched online, urging Americans to come to gather to take action to restore real value to the economy and pass shareholder resolutions gathering information and/or limiting dealings with the top five derivative banks, that represent 96% of all over-the-counter derivative trades.
March 29, 2010
State of California Treasurer requests information from the top five derivative trading banks on details on their speculative credit default swap trades on State of California municipal bonds.
June 4, 2010
State of California Treasurer urges tougher Federal limits to curb speculation with credit default swaps linked to Municipal bonds.
The Office of the Comptroller of the Currency (OCC) releases First Quarter 2010 derivative trading statistics by top five commercial banks. Revenues from credit default swap trades are at an all -time high, $2.7 billion, which represents 33% of the total derivative trading income, $8.2 billion. However, credit default swap contracts represent only 7 % of all derivative contract volume and are not used by end users for facilitating valid commerce. Only 10% of credit default swap contracts are used for valid hedges.
July 2, 2010
Senate Conference committee. yielding to pressure from Senator Scott Brown (R MA) removes tax on banks to pay for monitoring systemic risk on top five banks' speculative derivative trades, placing onus, once again, on American taxpayer.
July 8, 2010
Appleseed launches the first sustainable value equity fund, that prohibits investments in the top five derivative trading banks, or "two-big too fail banks", along with tobacco firms and pornography firms.
Dodd/Frank was passed.
It is apparent nothing has changed. There is on-going regulatory capture. The rules are ambiguous and without clear enforcement actions and the underlying regulatory failures will continue leading to another financial collapse, that unfairly burdens the "little guy, not to mention the morals and fabric of our society.
The Derivative Project submits comments to the SEC on the President's Working Group on Money Market Reform
, advocating for more online disclosure on assets underlying asset backed securities. Without this information, any disclosure is meaningless to investors and the average retail investor cannot perform required due diligence.
On December 3, 2010 The Derivative Project meets with SEC Commissioners Paredes, Walter and Aguilar, in addition to Chairwoman Shapiro's Deputy Chief of Staff concerning the Office of Investor Advocate. The Derivative Project is told on that date by Deputy Chief of Staff that this Office will not be funded in 2011 due to Republican budget constraints.
The Derivative Project is asked by Chairwoman Shapiro's Deputy Chief of Staff if she would like her comments published, as required of any public disclosure. The Derivative Project responds she would like the materials published at the SEC public comments on the Office of Investor Advocate. Here is The Derivative Project's report
given to all three Commissioners and Chairwoman Shapiro's Deputy Chief of Staff on December 3, 2010.
To this date, the SEC has not published this meeting with The Derivative Project, nor the written comments provided to the three SEC Commissioners in each individual meeting and with the Deputy Chief of Staff of Chairwoman Shapiro.
Study on Enhancing Investment Adviser Examinations under Section 914 of the Dodd Frank Wall Street Reform and Consumer Protection Act, File No. DF Title IX—Enhancing IA Examinations
Congresswoman Michelle Bachman(R-MN), Chair, Tea Party Caucus, submits legislation in the Republican controlled House to repeal Dodd-Frank.
January 4, 2011
There is an alternative that both Congress and Wall Street refuse to address on behalf of taxpayers and that is the easy movement of certain OTC contracts to regulated exchanges. In particular, there is absolutely no reason that all speculative credit default swaps cannot become regulated futures contracts, trading on regulated exchanges., saving U.S. taxpayers billions of regulatory costs. It would cut into Wall Street trading profits and increase transparency but the pros and cons for U.S. taxpayers must be outlined in a cost-benefit analysis, that is yet to be addressed by the CFTC, SEC and Congress.
Wall Street lobbying organizations seek to dilute effectiveness of over-the-counter derivative rules established in Dodd-Frank. Implementation is delayed, putting individual retirement investors at further risk.
Consumer "Advocate", Barbara Roper, "representing" retail investors for the Consumer Federation of America endorsed FINRA as the overseer of all SEC registered investors advisors, while the same week, the U.S. Chamber of Commerce published a study showing the lack of any transparency and any training in the financial markets for FINRA executives, supporting many retail retirement investors claims that FINRA is the "fox guarding the hen-house" and actually harming individual retirement investors accounts.
Here is the U.S. Chamber Study on U.S. Capital Markets Competitiveness: The Unfinished Agenda
published this month.
The Derivative Project submits Petition for Rule making to SEC
PETITION FOR IMMEDIATE REGULATORY ACTION FOR SEC RULE CHANGES TO
REESTABLISH THE ORIGINAL CONGRESSIONAL INTENT FOR A CLEAR DICHOTOMY
BETWEEN “SALESPERSON” AND “INVESTMENT ADVISER” UNDER THE INVESTMENT
ADVISERS ACT OF 1940
with four objectives:
- Ban dually - registered Wrap Accounts
- Eliminate FINRA as self-regulatory organization for any retirement account
- Allow the private right of action for any retirement account
- Ban mandatory arbitration for any retirement account.