But then he came to the nub of the issue. The easiest scammer to find is a repeat offender. We actively seek out people who promote dodgy stocks and who who are repeatedly involved in dodgy companies. The slogan is “once a scumbag, always a scumbag”. That slogan is probably not strictly accurate - but we only need to be right 90 percent of the time to be fantastic at this business – and the recidivism amongst scammers is surprisingly high.As shocking as the outright law breaking on Wall Street it, what is legal is even scarier.
So, says my son asks you like nasty people to steal from poor investors, mutual funds (and he did not say pension funds for school teachers) so that you can join them in taking the loot by being a short-seller – and you don't want the regulators to do anything about it because there are more opportunities for you?
Sheepishly I confess yes.
And he says with a mixture of admiration and horror: “daddy you are more evil than I thought”.
I'm surely not the first one to observe this, but the incentives in our financial system are seriously whack.