Boondoggle brokers conferences cancelled

As a former mutual fund portfolio manager I can tell you that one of the sources of (potential) corruption within the financial industry is the annual boondoggle conferences that major brokerage houses host.

These conferences are sold to the institutional investor community as opportunities to meet with, and have private access to, the executive teams of major corporations and usually within a germane setting, such as Hawaii, or California, or Florida, or the Bahamas, or Mexico or…you get the idea.

Not all of these conferences qualify as boondoggles. In fact, most of them were hosted in places like New York City, or San Francisco; honest-to-God financial centers.  However, in my many years of going to even the legit conferences they were hardly ever productive.

So why do you suppose that brokerage firms such as Morgan Stanley, Goldman Sachs, Lehman Brothers, Deutsche Bank, etc. would hold the conferences in such a fair clime? Yes, that’s right, it was a form of a kickback.  In other words, not ethical stewardship of your money.  Bluntly, I am criticizing these capitalist institutions.

You would get the invitation to the boondoggle conference if in fact you executed a large enough number of trades via the brokerage firm’s trading desks. A volume of trades also meant that you were more likely to get the opportunity to meet with management privately. And, of course, who ultimately pays for the travel and lodging expenses of the money managers that travel to the events?

Yes, that’s right, you do via the expenses paid to either brokers or in mutual funds. These sorts of kickbacks do matter to the unethical money managers of the world…believe me.

Thus, I am certain that your hearts will be broken to hear that Goldman Sachs cancelled its annual hedge fund manager retreat to Miami this year. They specifically stated that there was tremendous scrutiny right now of banks’ actions. Wah! Other banks, including Morgan Stanley, Citigroup, and Wells Fargo have cancelled similar confabs. Wah!

But there is a point to this post, not just a rant on my part, and that is that this is another sign that: things are changing. If scrutiny of the way the financial industry operates is continuously applied then some of the shadiness of the entire industry can be wrung out. Hurray!

The shocking fact is that it has taken all of the trillions of dollars lost in the financial markets and in gross domestic product (GDP) numbers to get these financial institutions to even begin cancelling the conferences.

And, by the way, they did not cancel the conference due to financial concerns (TARP and taxpayers can pay for that), but because “it might look bad.” Next time you pour yourself a drink, toast to the ending of the b.s. ways that most financial professionals operate.

Jason