Included in the article about Facebook were a litany of past deals in which Wall Street orchestrated financings to take advantage of investor credulity; that is, they pulled the wool over the heads of unsuspecting investors who were told that the rules were different this time around. You can ignore mundane things like price earnings or the need for a well articulated business plan, i.e. how to monetize the very popular "free" service that attraced millions of people to sign up and use for "FREE!".... Who can be made to pay for the right to advertise to this giant list of potential 'suckers'? GM dropped its Facebook Advertising just about the same time Facebook and Wall Street were telling you that "its different this time" just "trust us" because this IPO "is going to the moon" regardless of good old fashioned balance sheet issues and uncertainties.
The more we ignore history, the more likely history will repeat....
In the last 12 years alone, Goldman Sachs and other Wall Street firms have made us believe we were getting a good investment but:
In 2003, 10 of the largest investment banks in the United States -- including Goldman, JPMorgan Chase (NYS: JPM) , and Merrill Lynch (now a part of Bank of America (NYS: BAC) ), among others -- ch reports to inflate the value of their clients' IPOs.admitted to issuing fraudulent resear
In 2007, emails between Goldman bankers show how the firm created financial instruments designed to fail and then sold them to clients in the now-infamous TimberWolf deal
In October of last year, Rajat Gupta, one of Goldman's directors was arrested on charges of insider trading.
In November of last year, Goldman underwrote the disastrous Groupon (NAS: GRPN) IPO after the daily deals website over-reported its revenue by a factor of two.
In March of this year, a departing Goldman executive penned an op-ed in The New York Times revealing that managing directors at the firm regularly referred to their clients as "muppets."
And just this month, after attacking the proposed Volker Rule as unnecessary, which bans federally insured banks from proprietary trading, Jamie Dimon, the CEO of JPMorgan, was forced to acknowledge that this very behavior had cost the bank's shareholders over $2 billion in losses.
One would have thought investors had learned their lesson by now. But evidently not.
Source:
http://www.dailyfinance.com/2012/05/31/oops-wall-street-did-it-again/
by John Maxfield, The Motley Fool
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