Comment 28040

By A Smith (anonymous) | Posted January 06, 2009 at 11:16:20

Brandon, I lost 20K in a stock that turned out to be a complete fraud. This stock was listed on the NYSE, so I assumed that the numbers, even thought they reflected the past, were enough of a buffer to allow me to get out if the company's fortunes spiraled down. The problem was, the numbers were imaginary. Somehow the regulatory structures set up by the government to give investors like myself confidence, only served to drop my guard and my gut instinct.

I remember thinking that something wasn't right after a couple of months, but I also remember thinking that this couldn't be the case, because the balance sheet was all on balance, no off balance shenanigans like Enron. The problem was, the government couldn't even guarantee the truth about what they had in their company bank accounts. Where the company said they had $250M in cash, there was probably $250.

Abolish regulations, make investors more responsible for their investments and you will likely see much greater transparency in all financial markets. When investors realize that there is no one out there to protect them but themselves, they will demand much greater access to a company's inner workings. If companies need capital, which they always will, they will have to do much more than the minimum the government requires of them today. If they don't give investors this insight, they will not get the capital.

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