In a country like USA where there is a decent press, democracy and a vigilant SEC, the financial fraud culprits are brought to book quite slowly, if at all. What will happen to Indian customers who have been had? How does one react to the CEO of a foreign bank saying “we will make up our sub-prime losses by the fee income we receive in India and China”. To me it sounds scary. Most foreign banks know KYA very well – “Cover Your Ass”. So they will continue to sell high upfront fee products. Unfortunately given our press, our authorities, our lackadaisical attitude to bad sales pitch will ensure that Indian customers will get milked for far too long. That is sad. What set me off to write this post is the following news item from the AG in USA:
“JP Morgan Chase & Co. and Morgan Stanley have collectively agreed to return over $7 billion to investors who purchased auction rate securities under a settlement announced by New York State Attorney General Andrew M. Cuomo.
The agreements settle allegations that JP Morgan and Morgan Stanley made misrepresentations in their marketing and sales of auction rate securities. “JP Morgan and Morgan Stanley marketed and sold auction rate securities as safe, cash-equivalent products, when in fact they faced increasing liquidity risk,” according to a press release by the AG.
You have similar stories of Citibank, and some of the other biggies…..
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