ABC News 20/20 Has News for You!
I pulled my column for this month at the last minute. As I was putting the finishing touches on the column, to ship it off to Research, I was watching the ABC News Program, 20/20. The piece that caused me to pull my column was about the serious heroin addiction problem among stock brokers. The commercial for the show featured the story as the lead story, asking viewers if they were aware of the serious heroin problem among stock brokers on Wall Street, and asking if viewers knew if their broker was addicted to heroin.
Since I work on “the Street”, and have done so for over 17 years, and spend most of my waking time representing stock brokers, I was shocked at the lead-ins. I was even more shocked after watching the piece.
The introduction purported to present the results of an extensive undercover investigation by Chris Wallace, into the use of heroin by the people who manage your money. An extensive undercover investigation. The story starts with low angle camera shots of the New York Stock Exchange, and ominous looking “drug dealers” hanging out on street corners. The voice over describes heroin dealers operating within 2 blocks of the Exchange, and that 100’s of financial employees have become addicted to heroin over the past three years.
Shocking, but wait a second ”financial employees”? That is not an accident. There are approximately 600,000 persons with a Series 7 license, and undoubtedly millions of people employed at brokerage firms (otherwise known as “financial employees”). So, while the hyperbole was talking about stock brokers, the sketchy details included everyone who works for a brokerage firm, or a “financial” firm.
Shocked, I watched with amazement, and noticed the terms being used – “financial professionals”, “brokerage firm employees”, and similar terms, encompassing a broad array of people, from the president of Salomon Smith Barney, to the messengers, to secretaries, to runners at the Exchange. I became concerned. Just who were they talking about?
Next was an interview with a woman who was described as being a “former Merrill Lynch manager.” A manager? Addicted to heroin? Employed at Merrill Lynch? A Merrill Lynch Branch Manger was a heroin addict? My antenna were up. ABC strongly implied that the woman was a Branch Manager in a Merrill Lynch Wall Street area office. The interviewer asked her if she was addicted, she said yes. They asked if she had access to customer’s accounts, she said yes, 1,000’s of accounts. But wait, lots of people have access to customers accounts – brokers, secretaries, sales assistants, margin clerks, operations personnel. Access does not mean that she could take money.
The story then switched to a former undercover DEA agent, Robert Stang. Interestingly enough, I met Mr. Stang years ago, in connection with a drug related case on Wall Street – in 1987, over 12 years ago. ABC however, showing footage of that very case, presents Mr. Stang as an expert on the drug problem on Wall Street, and he tells a story of a “broker” who was held hostage by his drug dealer. Interesting; but who was the broker, and was he really a broker, or a “financial professional” or perhaps a “Wall Street Brokerage firm employee.”
Unfortunately, ABC never tells us, and rather moves to a voice over telling a story of a broker found dead of a heroin overdose in 1985, and five more “brokers’ overdosing since then. Wait a second, in 14 years, 6 “brokers” however they are defining that word, have overdosed on heroin. Again, no names, no details, but while even one overdose would be cause for concern, 6 out of at least 600,000 registered representatives over a 14 year period is an epidemic?
The story continues, showing camera shots of Chase Manhattan Plaza, a block off of Wall Street, presumably the location of the drug dealers referred to earlier in the piece. According to ABC, you must ignore the fact that tens of thousands, if not millions, of people work downtown, most of whom have nothing to do with the brokerage industry, and that Chase Manhattan Plaza is a major pedestrian thoroughfare for workers going home at night. The Plaza is centrally located between the PATH trains to New Jersey, the two major subway lines midtown, and ultimately to Westchester and Nassau counties, and it is two blocks away from the World Trade Center. No, none of that is important, and the only thing ABC focuses on is that it is three blocks from the New York Stock Exchange, and they actually say that the dealers are there because brokers are there.
Naturally, ABC believes, after its extensive undercover investigation, that retail stock brokers work at the New York Stock Exchange, and they are buying their heroin at Chase Manhattan Plaza. So much for the depth and breathe of their investigation. By the way, is there a single retail representative who works at 11 Wall Street?
However, not to let the truth get in its way, the story continues, and profiles a woman who lost money with a commodity broker .yes, a commodity broker. Her life’s savings, and he was so aggressive, she wondered whether he was on something. Listen carefully, and you learn that the woman invested $5,000 (they describe it as a third of her life’s savings), and lost something less than that. Turns out, her broker was later fired for drug addiction. True story? I don’t known, they never identified the broker, but I don’t know of any stock brokers who handle $5,000 commodity accounts.
Remember the Merrill Lynch Manager? Turns out she “handled stock orders” at a Merrill Lynch branch in White Plains, New York. Apparently ABC thinks that White Plains is somewhere near Wall Street, and thinks that a wire operator is a Merrill Lynch Manager. Perhaps she was a manager of the wire operators, but she certainly was not a Branch Manager, as implied by the opening statements.
Turns out that this “manager” figured out a way to take money out of the thousands of accounts that she had access to; that Merrill Lynch knew that she had a drug problem, and let her continue working. Holy Cow! But wait, the truth lay a few sentences later. The woman managed to take “approximately $10,000” from customer accounts, she was caught, fired, and the customers repaid, by Merrill Lynch. This is a major news story? Clerical employee steals money, gets caught, gets fired, and her employer makes the customers whole? ABC News thinks it is, and thinks it is evidence of a brokerage firm who is ignoring heroin addiction. I guess we can’t let the facts get in the way of a good story.
But we are not done yet. The center piece of the story is a Commodity Broker, a former “partner in a major trading firm”. Wait, now we have switched again to commodity brokers. Does ABC News think THEY work at the New York Stock Exchange? This broker apparently had a serious heroin addiction, and continued reporting for work, losing money for his accounts, and his dealers actually delivered his drugs to his office, by messenger. Serious issue, serious allegations, ONE commodity broker.
Fortunately, ABC had the common sense to interview the President of the Securities Industry Association, who told the reporters that their examples were isolated cases, in an industry with zero tolerance for drug abuse. He concluded saying that drug abuse is a non-existent problem in the industry.
Of course, ABC news was not happy with that answer, but rather than responding with facts, engaged in sweeping commentary regarding drug enforcement policies amongst brokerage firms.
In short, a story touted to be the result of an extensive undercover investigation into heroin addiction among stock brokers, failed to even mention a single stock broker who was addicted to heroin. They did identify 2 “financial employees”, one a “financial professional” (of the millions of “financial employees”, at least a million “financial professionals” and over 500,000 stock brokers) who had a heroin problem. They referenced 6 other overdoses, but never identify who those individuals were, or even what type of financial employee they were.
So, a major news organization, in nationwide prime time, with no evidence, told millions of investors that their stock broker might be a heroin addict. If that was said about attorneys, the American Bar Association, the Trial Lawyers Association, and dozens of other professional associations would be on ABC News in a heartbeat. If they said the same about teachers, the American Federation of Teachers would be filing suit. If they said the same about doctors, dentists, accountants, newspaper reporters, nurses, or any other group of professionals, their trade organizations and individual members would be on the phones, writing letters and raising hell.
But stock brokers? The National Association of Investment Professionals will react, but with limited funds, and limited membership, it will not be able to do much. No other group of professionals has failed to support is professional association like stock brokers have failed to support their own professional association.
And what are YOU going to do about being called a heroin addict? The same thing you did when your Fifth Amendment rights were taken away from you, when the protections of the Eighth Amendment were stripped from you, the same thing you did when your due process rights were taken away from you, when your right to earn a living were impacted by regulators and arbitration panels, and when arbitrators allowed customers to win awards against their brokers simply because they lost money.
Copyright 2010. VGIS Communications LLC. All Rights Reserved. VGIS Communications, LLC – 41 Watchung Plaza, Suite 249, Montclair, New Jersey 07042 – 973-559-5566. Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial adviser before acting upon the information contained in this article. For additional information, contact Mark J. Astarita, Esq., a partner in the law firm of Beam & Astarita, LLC, who represents clients in a wide variety of finance related matters. Mr. Astarita can be contacted by email at firstname.lastname@example.org.
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