whistleblowers

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Re: whistleblowers

Postby admin » Mon Sep 20, 2010 9:04 pm

The ProPublica Blog
Exec Who Blew Whistle on Moody’s Ratings Sues for Defamation
by Marian Wang
ProPublica, Sep. 13, 5:44 p.m.3
http://www.propublica.org/blog/item/exe ... defamation

Raymond W. McDaniel, Chairman and CEO of Moody's Corporation (Photo by Mario Tama/Getty Images)

A former executive at Moody’s Investors Service filed a civil suit in federal court today in Manhattan, alleging that the ratings agency defamed him after he flagged problems with their ratings. (Read the full complaint.)

During his time at Moody’s and after his employment there ended in 2009, Eric Kolchinsky, the plaintiff, said he raised concerns—several times to his employers, then to congressional investigators, and finally to a House panel last fall—about securities fraud and inflated ratings at Moody’s.

According to the complaint, Kolchinsky’s concerns were publicly countered by Moody’s with attacks and attempts to discredit him. In September 2009, a Moody’s spokesman told the Wall Street Journal that Kolchinsky “refused to cooperate” with an internal investigation. A month later, The Wall Street Journal quoted CEO Raymond McDaniel calling his allegations “not supported by the facts” and “without merit.”

“Moody’s repeatedly and publicly published falsehoods about Mr. Kolchinsky, the tone and purpose of which was to cast dispersion [sic] on his credibility as a ‘whistleblower’ and to disgrace and ridicule his work and reports,” the complaint reads. “Moody’s claims were intended to make Mr. Kolchinsky seem like an unprofessional, disgruntled employee who files claims and performs faulty analysis, based on unmeritorious statements.”

The suit asserts that the attacks came despite an acknowledgement under oath from a Moody’s executive that the company had, in fact, adopted some of Kolchinsky’s ratings-methodology recommendations.

Responding to the suit, a spokesman from Moody’s told the Journal, “We are confident Mr. Kolchinsky has no basis for any suit against Moody’s.” We’ve also put in a call to Moody’s for their response. Moody’s has said in the past said that “Moody’s has a strict non-retaliation policy, and Mr. Kolchinsky was not disciplined or suspended because he raised complaints.”

Kolchinsky is seeking $15 million in damages, plus legal fees.

As we’ve noted, Moody’s recently dodged enforcement action from regulators at the Securities and Exchange Commission, which had earlier warned the firm of the likelihood of a fraud lawsuit for failing to fix what it knew was an erroneous rating.

We’ve also noted that faced with the financial reform bill, Moody’s and other credit ratings agencies have warned bond issuers not to use their ratings in official documentation for bond sales, because if those ratings are included and turn out to be incorrect, agencies could be held liable. The ratings agencies contend that ratings are their best predictions of the future, and they shouldn’t be held liable if those predictions don’t pan out.

The big financial firms also played some role in the prevalence of inaccurate ratings. Emails released by congressional investigations earlier this year how banks sometimes pressured ratings agencies to give good ratings to lousy securities, and how agencies—fearing of losing market share—would often give in.
http://www.propublica.org/blog/item/exe ... defamation
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Re: whistleblowers

Postby admin » Thu Jun 10, 2010 8:45 am

Note from one whistleblower to another after ten or more years of speaking up about abuses of others. One whistleblower has been fired from more than one job, jailed, fined and demoralized for more than a decade, the other has had to retire and try to rebuild a life from scratch.
.....................................................................................................
good talking to you Joe

I know a little bit about how you might be feeling. I have certainly gotten my own level of disappointment with my journey's and struggles and while I have not paid the price that you have (gone to jail for your beliefs) I have had my trials.

It helps to chat about it once in a while, so for that I thank you. I also applaud your tenacity and persistence, and while I do not always agree with your communication style, I have to say you are one of the most "stick to it" guys I would choose if I needed a defender. that is a good thing.

We both either have a "stuck" switch somewhere inside our heads which will not let us "let go", or else we are fighting for what is "right", and that is why we will not let go. Perhaps a bit of both. I have done a fair amount of research on both and I can see how I have been affected by what I have gone through.

So the bad news is that there is a price to pay for being in a fight for what we think is right. I did not know this when I started, I naturally assumed I was bulletproof way back when. What I have learned in the meantime is that if a person spends years and years inside or witness to very "disturbing" events, it is fairly easy to become "disturbed". I have been there.

Being constantly "disturbed" by outside events or by what we hold inside can and does lead some people to being "distressed", or stressed, and a constant or near constant state of stress has been known to chemically alter (or physically alter or both) a persons brain. It is thus quite easy to find symptons like depression, "dis"ease, and all the hundreds of other effects that begin to haunt people who have lived under stress for too long. (depression, addiction, aggression, self sabotage, incarceration, institutionalization, and on and on and on)

By this time, I hope you realize that I am writing this more for myself Joe, and not trying to force feed you on anything. It is helping me to write it down, and I will post it under "whistleblowers" at http://www.investoradvocates.ca I hope it might help others in future who are going through their own challenges.

I found an interesting article from the Mises people, they are a group who follows the "Austrian School of economic theory" for those who don't know. It is "old school" theories and philosophies, meaning they look back to the roots of some of our problems and I think they do a pretty good job of explaining things. The article pasted below mentions how we formed some of our "abusive" norms of taking advantage of people for economic gain. I hope you like it. We will talk again Joe. Keep the faith.
Larry

Mises Daily

Building the Ruling Elite
by Murray N. Rothbard on June 10, 2010
[This article is excerpted from An Austrian Perspective on the History of Economic Thought, vol. 1, Economic Thought Before Adam Smith. An MP3 audio file of this article, read by Jeff Riggenbach, is available for download.]


The system of mercantilism needed no high-flown "theory" to get launched. It came naturally to the ruling castes of the burgeoning nation-states. The king, seconded by the nobility, favored high government expenditures, military conquests, and high taxes to build up their common and individual power and wealth. The king naturally favored alliances with nobles and with cartelizing and monopoly guilds and companies, for these built up his political power through alliances and his revenue through sales and fees from the beneficiaries.

Neither did the cartelizing companies need much of a theory to come out in favor of themselves acquiring monopoly privilege. Subsidy to export, keeping out of imports, needed no theory either: nor did increasing the supply of money and credit to the kings, nobles, or favored business groups. Neither did the famous urge of mercantilists to build up the supply of bullion in the country: that supply in effect meant increased bullion flowing into the coffers of kings, nobles, and monopoly export companies. And who does not want the supply of money in their pockets to rise?

Theory came later; theory came either to sell to the deluded masses the necessity and benevolence of the new system, or to sell to the king the particular scheme being promoted by the pamphleteer or his confreres. Mercantilist "theory" was a set of rationales designed to uphold or expand particular vested economic interests.

Many 20th-century historians have lauded the mercantilists for their proto-Keynesian concern for "full employment," thus showing allegedly surprising modern tendencies. It should be stressed, however, that the mercantilist concern for full employment was scarcely humanitarian. On the contrary, their desire was to stamp out idleness, and to force the idle, the vagrant, and the "sturdy beggars" to work. In short, for the mercantilists, "full employment" frankly implied its logical corollary: forced labor. Thus, in 1545, the "sturdy beggars" of Paris were forced to work for long hours, and two years later, "to take away all opportunity for idleness from the healthy," all women able but unwilling to work were whipped and driven out of Paris, while all men in the same category were sent to the galleys as slave labor.

The class basis of this mercantilist horror of idleness should be instantly noted. The nobility and the clergy, for example, were scarcely concerned with their own idleness; it was only that of the lower classes that must be ended by any means necessary. The same is true of the privileged merchants of the third estate. The thinly veiled excuse was the necessity of increasing "the productivity of the nation," but these classes constituted the ruling elite, and such forced ending of idleness, whether on public works or in private production, was a boon to the rulers. It not only increased production for the latter's benefit; it also lowered wage rates by adding to the supply of labor by coercion.

Thus, at the meeting of the states general, the parliamentary body of France, in 1576, all three estates united in their call for forced labor. The clergy urged that "no idle person … be allowed or tolerated." The third estate wanted "sturdy beggars" to be put to work, whipped or exiled. The nobles urged that "sturdy beggars and idlers" be forced to work and whipped if they refused to comply.

The same Estates-General made their special pleading all too painfully clear in the matter of protective tariffs. The estates called for the prohibition of imports of all manufactured goods and the export of all raw materials. The purpose of both measures was to throw a wall of monopoly protection around domestic manufactures and to force producers of raw materials to sell their goods to those domestic businesses at an artificially low price.

The excuse that such measures were necessary to "keep bullion" or money "at home" would seem patently absurd to any objective person. For if French consumers are to be prevented from buying imports in order to safeguard "their bullion," what might happen otherwise? Was there really any danger of Frenchmen sending all their bullion abroad and keeping none for themselves? Clearly, such an event would be absurd, but even if it happened — the worst-case scenario — there is an evident hard maximum limit to any outflow of bullion from home. For where are the consumers bent on further importation going to get more bullion? Clearly, only by exporting other products abroad.

"Mercantilist 'theory' was a set of rationales designed to uphold or expand particular vested economic interests."
Consequently, the "keeping money at home" argument is patently fraudulent, whether in 17th-century France or in the 20th-century United States. The Estates-General were interested in protecting certain French industries, period.

The "keeping money at home" argument was also a convenient stick to beat foreign businessmen or financiers who could outcompete natives. Thus the prospect of German bankers and Italian financiers flourishing in France gave rise to paroxysms of fury at the "ill-gotten gains" of foreigners, taking money out of the country, fury that was of course fed by the typically mercantilist egregious "Montaigne fallacy" that one man's (or one nation's) gain on the market was ipso facto another man's (or nation's) loss. These disgruntled Frenchmen often suggested that foreign financiers be expelled from the country, but the kings were typically too bogged down in debt to afford such counsel.
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Re: whistleblowers

Postby admin » Tue Jun 01, 2010 7:35 am

harveyschachter_1119bio5.jpg
harveyschachter_1119bio5.jpg (20.49 KiB) Viewed 6500 times
Harvey Schachter

Speaking truth to power
Watching Montreal Canadiens defenceman Hal Gill block shots in the early rounds of the hockey playoffs led consultant Patrick O’Neill to think of the importance of speaking truth to power in the workplace. That seems a stretch, but he notes in his Extraordinary Conversations newsletter that blocking shots is a thankless task, requiring bravery, anticipation, and timing – as does speaking truth to power. It is also a sign, as Coach’s Corner authority Don Cherry decrees, that you have your heart in the game, a prerequisite for courageously speaking up at work.
Mr. O’Neill notes that good communication, as defined by cultural anthropologist Angeles Arrien, requires the right timing, right context and right content, so that’s similar as well.
Finally, remember that after you have made your case and a decision has been made, you must move on. “Unless crimes are being committed or lives are in jeopardy, you have done your duty by speaking truth to power,” he advises.

http://www.theglobeandmail.com/report-o ... le1586813/
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Re: whistleblowers

Postby admin » Sat May 29, 2010 8:38 am

taber29nw1_671961artw.jpg
I found this and posted it not because this lady is a true whistleblower, but that she has taken the high road and in doing so it has set herself apart and her relationship in jeopardy from her peers. It is a subtle difference but it illustrates just how risky it can be to step or speak against the crowd, even when one is trying to do the right thing. It reinforces my worry that Canada is too deeply infected with conflicts of interest and corruption. Read on.......

“Right now, she is not very popular in our caucus,” said the Liberal source. “It’s hard when you go against the grain, especially when it’s the right thing to do.”

Friday, May 28, 2010 6:15 PM Globe and Mail
Rookie Liberal gets cold shoulder for coming clean on expenses
Jane Taber

There were some smirks and sniffs as rookie Liberal MP Michelle Simson told caucus colleagues this week that sometimes it’s easier to do the right thing. It was not a message her colleagues enjoyed hearing.
Ms. Simson is the first MP to take the bold step of publicly revealing her MP expenses. Last year, with little fanfare, she posted the information on her website, fulfilling an election campaign promise to her constituents that she would show them how she spent their money.
But with the issue blowing up all over the Hill after the secretive all-party Board of Internal Economy decided to block the Auditor-General from looking at MPs’ spending, Ms. Simson has suddenly become the poster child for political accountability and transparency.
While she is being feted by Canadians who like what she did, some caucus colleagues are giving her the cold shoulder.
That’s because, according to one Liberal caucus source, some believe her actions are making them look bad.
Behind the closed doors of caucus this week, however, Ms. Simson was not grandstanding. Neither was she trying to suggest she was better than her colleagues.
She simply wanted other MPs to know that it’s not scary to post expenses; when she did it she suffered no consequences. In fact, she has said that not one of the more than 100 people who sent her e-mails in response commented on how she spent the money. The comments were congratulatory.
Rather than praising her and encouraging other MPs to follow her lead, however, Liberal Leader Michael Ignatieff told members not to do what she did.
He told his caucus to stick together and not to be mavericks on this issue. He is concerned that different MPs could post different expenses, creating the perception of inequities.
“Right now, she is not very popular in our caucus,” said the Liberal source. “It’s hard when you go against the grain, especially when it’s the right thing to do.”
Doing the right thing is not a stretch for Ms. Simson.
The 56-year-old MP from Scarborough Southwest – who lives in Markham and was appointed the Liberal candidate by former leader Stéphane Dion in an effort to find gender balance – has a background in banking.
She worked for a bank before ending up in the auto-leasing business; she met her husband (they’re celebrating their 35th wedding anniversary on Monday) at the bank; their 29-year-old son works for the Bank of Nova Scotia.
“It just didn’t come as anything strange,” she says about being accountable, having had to endure random internal audits when she worked at the bank.
“They came in and it was a surprise. They’d come after hours, show up with black bags and they would rip through everything. And so I was used to it,” she recalled in an interview this week.
During the 2008 election campaign, with government spending and waste an issue in her riding, Ms. Simson promised that if she was elected she would open her books.
“Once you are elected there are very few things that you really do control as an individual MP,” she says. “And I said [to voters], but the one thing I can tell you is I’ll be accountable ... you’ll see where I spend my money.”
But Ms. Simson knows that any time “you put yourself out there” there are consequences.
“I’m sure that there may be colleagues from various parties that maybe weren’t enamoured with what I did,” she says. “But frankly, I couldn’t afford to really worry about that because I answer to the constituents and it’s taxpayers money.”
Over the next few days she is planning to post numbers for this year. And despite her leader’s edict, she is having an influence. Two of her Liberal colleagues this week released detailed breakdowns of their expenses.
“We need more people like that,” said one of her colleagues about Ms. Simson.
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Re: whistleblowers

Postby admin » Mon Mar 29, 2010 9:44 am

* 28 Mar 2010
* Ottawa Citizen
* BY JAMES PRESSLEY
The man who outed Madoff


Whistle-blower began to wonder if $65-billion fraudster was untouchable

Blank stares, disdain and tears. Harry Markopolos encountered all three during his nineyear struggle to convince the U.S. Securities and Exchange Commission that Bernard Madoff ’s returns were mathematically impossible.

SEC officers didn’t grasp the numbers until the Ponzi scheme had swelled to $65 billion, as Markopolos shows in No One Would Listen, a disturbing firsthand account of his quest to expose one of the most powerful men on Wall Street.
Markopolos, a self-described “proud Greek geek,” is a former chief investment officer at Rampart Investment Management in Boston. His investigation began in 1999, when a colleague learned of Madoff ’s investment returns and urged Markopolos to replicate his strategy, he writes. Markopolos soon concluded that the numbers didn’t add up: “There’s no way this is real,” he recalls telling his colleague. “This is bogus.”

So began his surreal journey into the warped world of Bernie Madoff, the broker-dealer who was producing too-good-to-be-true returns of one per cent to two per cent per month. Markopolos’s odyssey pitted him against bosses who urged him to match Madoff ’s results, against investors who didn’t want to hear the truth, and against SEC staffers who either didn’t listen or couldn’t understand what they heard.

By the time Madoff was arrested on Dec. 11, 2008, Markopolos had reported his concerns to the SEC five times and had begun to wonder if Madoff was untouchable. Fearing that he and his family were in jeopardy, he packed a Smith & Wesson and even considered killing Madoff if need be, he says.

“ If he contacted me and threatened me, I was going to drive down to New York and take him out,” Markopolos writes.

Markopolos can come across as paranoid but when, in an interview with The Sunday Times of London, he pointed to the book’s map showing where Madoff ’s money was going, it’s easy to see why he felt nervous. With his American business at saturation point, Madoff had his eyes on Russia and Asia. Markopolos believes money from drugs and gangs washed through Madoff accounts.

“ Prison is the safest place for him,” Markopolos said. “He is in jail to protect him from his investors” — although it emerged recently that Madoff had been beaten up at the North Carolina prison where he is serving a 150-year sentence.

The truly shocking thing about this book is its cumulative effect, not any individual revelation. Step by step, Markopolos exposes the dangerous “mismatch in skills” between SEC lawyers and the market pros they regulate.

“Sending lawyers to oversee capital markets professionals is like sending chickens to chase foxes,” he says with characteristic bravado.

Time after time, Markopolos offered SEC officials mathematical evidence that they seemed ill equipped to comprehend. In May 2000, for example, Markopolos says he met with a senior SEC enforcement official in Boston to explain why Madoff couldn’t be making money, as claimed, with a stock-and-options trading strategy known as a split-strike conversion.

All Markopolos got for his trouble was a blank look. “It very quickly became clear he didn’t understand a single word I said after hello,” he writes.

In November 2005, Markopolos called another senior SEC official, he says, and asked if there was anything in his third submission that she didn’t understand. She seemed insulted and in a hurry to get off the phone, he says.

“Do you understand derivatives?” Markopolos asked.

“ I did the Adelphia case,” she replied. Well, Markopolos responded, that case involved an accounting fraud. A derivatives fraud, he said, requires a higher level of financial sophistication.

Those two episodes were previously reported in a damning 457-page review by SEC Inspector General H. David Kotz, who said the agency missed at least six opportunities to spot Madoff ’s fraud. They take on greater significance here, as Markopolos lays out the market realities that SEC off icials either didn’t understand or ignored.

For one SEC off icial, the math may have sunk in only after Madoff ’s arrest. During a meeting in February 2009, the SEC’s deputy inspector general, Noelle Frangipane, asked Markopolos to quantify how much money would have been saved if the SEC had listened to him in May 2000. His answer — $43 billion — was followed by a loud thud, he says.

“I turned to Noelle,” Markopolos writes. “Her head was down on the table and she was sobbing uncontrollably.”

The other hurdle for Markopolos was of course Madoff ’s reputation, both at the SEC and among investors. Madoff was “the ultimate insider,” Markopolos says. “I was the bothersome outsider. I was some quant from Boston nobody had ever heard of.” It probably didn’t help that Markopolos revels in being geeky, tells off-colour jokes and takes pride in being politically incorrect.

One money manager who ignored red flags about Madoff was René-Thierry Magon de la Villehuchet of Access International Advisors LLC, the man who f irst alerted Markopolos and his colleagues to the fact that Madoff was managing money.

Though they warned de la Villehuchet of their suspicions, he wouldn’t listen, Markopolos says. He was later driven to suicide by his firm’s Madoff-related losses, his brother said. He was found dead in his Madison Avenue office, with his arms and wrists slit. A box cutter and pills were nearby.

Markopolos has no time for those who argue that Madoff ’s honest investors should have realized that their returns were too good to be true.

“ Those people didn’t know. They’re not financial people. Madoff preyed on them. He was evil. He would go to funerals, put his arm around the widow and promise to take care of her. He’s a pathological liar, incapable of telling the truth,” he said.

Markopolos now heads an independent financial fraud investigation firm. He is currently investigating America’s giant healthcare and pharmaceuticals industry. “Those guys make Madoff look small time,” he said.
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Re: whistleblowers

Postby admin » Sat Mar 27, 2010 9:58 am

From GATA:

Additional Statement by Bill Murphy, Chairman
Gold Anti-Trust Action Committee to the U.S. Commodity Futures Trading Commission
Washington, D.C., March 25, 2010

On March 23, 2010, GATA Director Adrian Douglas was contacted by a whistleblower by the name of Andrew Maguire. Maguire is a metals trader in London. He has been told first-hand by traders working for JPMorganChase that JPMorganChase manipulates the precious metals markets, and they have bragged to how they make money doing so.

In November 2009 Maguire contacted the CFTC enforcement division to report this criminal activity. He described in detail the way JPMorgan Chase signals to the market its intention to take down the precious metals. Traders recognize these signals and make money shorting the metals alongside JPM. Maguire explained how there are routine market manipulations at the time of option expiry, non-farm payroll data releases, and COMEX contract rollover, as well as ad-hoc events.

On February 3 Maguire gave two days' warning by e-mail to Eliud Ramirez, a senior investigator for the CFTC's Enforcement Division, that the precious metals would be attacked upon the release of the non-farm payroll data on February 5. On February 5, as market events played out exactly as predicted, further e-mails were sent to Ramirez while the manipulation was in progress.

It would not be possible to predict such a market move unless the market was manipulated.

In an e-mail on February 5 Maguire wrote: "It is common knowledge here in London among the metals traders that it is JPM's intent to flush out and cover as many shorts as possible prior to any discussion in March about position limits. I feel sorry for all those not in this loop. A serious amount of money was made and lost today and in my opinion as a result of the CFTC's allowing by your own definition an illegal concentrated and manipulative position to continue."

Expiry of the COMEX April call options is tomorrow, March 26. There was large open interest in strikes from $1,100 to $1,150 in gold. As always happens month after month, HSBC and JPM sell short in large quantities to overwhelm all bids and make unsuspecting option holders lose their money. As predicted by GATA, the manipulation started on March 19, when gold was trading at $1,126. Last night it traded at $1,085.

This is how much the gold cartel fears the CFTC's enforcement division. They thumb their noses at you because in more than a decade of complaints and 18 months of a silver market manipulation investigation nothing has been done to stop them. And this is why JPM's cocky and arrogant traders in London are able to brag that they manipulate the market.

This is an outrage and we are making available to the press the e-mails from Maguire wherein he warns of a manipulative event.

Additionally Maguire informed us that he has tape recordings of his telephone communications with the CFTC, which we are taking the appropriate legal steps to acquire.

* * *
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Re: whistleblowers

Postby admin » Sat Mar 13, 2010 10:24 pm

Death of a saleswoman
By Kem Coroi
Introduction — A Coroner’s Report

Death is never a pleasant subject, no matter how tragic or ennobling it might be to those left behind to contemplate its significance. There are occasions, however, in which it is in the public interest to investigate into a death, to determine its cause or the contributing causes and to make recommendations for the prevention of future deaths.

So it could be said that this is a coroner’s report, an inquest into a wrongful death, although, mercifully, not in any literal sense. The subject of this piece has not died physically, although the hardships she has had to endure would have led many a weaker soul to the brink of suicide. But death has many faces, and the one which will present itself, if not dire, necessarily, is an ugly one nonetheless: the death of a promising career.

The career which has passed away belonged to a stockbroker, or Investment Advisor (IA) as brokers are known in the industry, at HSBC Securities in Victoria, British Columbia. As will be evinced, it is difficult to point to any one specific cause of death, but there is no question that it was a homicide. This IA’s career was cut short, gunned down, stabbed in the back and garrotted with piano wire by the financial mafia, a.k.a. the HSBC Group and its henchmen at the British Columbia Securities Commission (BCSC).

Signs of the Times

No thoughtful person can deny that we are living in a time of corporate and government corruption which, if not unprecedented, is certainly being exposed with greater frequency than ever before. Graft and cronyism might be the grease on the wheels of commerce, but society seems to know when the grease is threatening to leave too large a trail. Which is to say that there is business which is dubiously conducted in the dark, with a black bag and a furtive glance, as it were, and then there is corporate and state criminality. Only a moral cretin can fail to see the distinction.

It has been said that the law is the handmaiden of justice. It is equally true—and glib, perhaps—that corruption is the handmaiden of death. Many of our institutions have become distinctly malodorous, unable to mask the stench emanating from out their pores as though from a rotting corpse. The federal government alone provides a multitude of examples, from “Sponsorgate” to “The Grand-Mere Affair”. All but forgotten is the “Billion Dollar Boondoggle” at the Ministry of Human Resources and Development, and the ill-conceived money pit, which passes for a national gun registry. Ad infinitum et ad nauseum.

But these examples belie that it is in fact the nature of corruption to be insidious; generally, it tends to avoid exposing itself to the light. Indeed, if libertarians are to be credited—and their prescience in this regard cannot be gainsaid—the state and its institutions are even more corrupt than the most reckless averments of the most pointy-headed conspiracy theorist could have suggested. We need not look far to find a case study, which would illustrate this assertion; indeed, would show it to be a truism. Like the ether it is unperceived and yet it is all around us. It does not even have a name, or rather, its name is Legion; it is generally referred to under the rubric “the financial services industry”.

There are many indicia of institutional corruption: turning a blind eye can be one, padding invoices can be another. They can be sins of omission as well as of commission. The hallmark of corruption, however, is unaccountability. In the financial services industry this unaccountability is built right into the system, as it is whenever the government cedes a portion of its authority to an unelected administrative body. In exchange for expertise, some professions are given the right to regulate themselves. Often, however, these deals made on behalf of electors assume the character of pacts entered into with the devil. The notion that these regulatory agencies, staffed by members of the profession they purport to regulate, are the legitimate guardians of the public trust and will in every instance act with utmost good faith, has become so naïve a point of view as to be laughable.

The case study, which is the subject of this coroner’s report, proves in spades that our trust in the financial regulators is misplaced. Our case is of an honest stockbroker (IA) who acquiesced in the death of her career for the sake of a client. She remains the only known case of an IA with the intestinal fortitude to clash with the financial mafia which controls the banking and investment industry. For the purposes of this report, and out of respect for the demise of her career, only her first name will be used in what follows: Marcia.

An Honest Broker

Marcia came into the brokerage business through the side door, as it were, of the HSBC Group, a British-owned banking and investment conglomerate whose head office for its Canadian operations is located in Vancouver. Her career in the financial services had already been a lengthy one; first she was a banker, then a Certified Financial Planner (CFP), both for many years. She was initially hired by HSBC Bank as a Manager of Investment Services (MIS), the scope of her duties encompassing financial planning and mutual fund sales to customers of the bank’s branch at Fort Street in Victoria.

Less than two years into her tenure, however, the powers that be (and at the HSBC Group these were said to reside in Olympian aloofness somewhere in London, England) determined that some drastic cost-cutting measures were in order. Profit is one thing, after all; maximizing profit is often quite another. Marcia was duly informed that the MIS program was to be phased out; she and her colleagues would have to become qualified as Investment Advisors (I.A.s) if they wished to remain employed with the Group. For their parts, the existing brokers were ordered to obtain their CFP licenses, although the alacrity with which this order was enforced left much room for suspicion. It seemed to be primarily those in the MIS program who were on the chopping block. The explicit goal of this agenda was to reduce the number of employees performing investment services in one form or another by two thirds.

The means chosen to achieve this end naturally involved various types of attrition. The requirement that I.A.’s must also be CFPs was an example of this; there was no sound business reason which could be gleaned from joining two disparate professions in one person. It was simply a way of culling the herd, and in the process, perhaps, instilling a sense of ruthless ambition in those who would be fortunate enough to emerge from the probationary period with jobs.

Ironically, it was this very requirement which would come back to bite the executive at HSBC Group in the backside in the months to come.

Many in the MIS program were not even allowed the opportunity to meet the new stringent educational criteria; the branch managers, whose own interests were at stake in the restructuring, simply pushed them out. One MIS or two refused to play the game at all and simply moved on under his own steam.

Her bosses probably believed that Marcia would be one of those who would fail to make the cut. She had already evinced a certain independence of mind, and would not be likely to play a game that was rigged from the outset. That someone might enjoy being a broker for the love of the job was beyond the ken of the likes of HSBC Group’s executive. Unscrupulousness in the pursuit of high standards can be controlled by such simple stratagems as money. Incorruptibility, on the other hand, is a perpetual wild card. But that is to give too much credit to HSBC’s honchos. It is doubtful, at this point, that Marcia had been earmarked for summary dismissal. It is more likely that she was not given a second thought.

Certainly she was naïve in many ways. She assumed, for instance, at least in the beginning, that there was nothing whimsical in the resolutions coming down from the executive at HSBC Group. Just as her stock market acumen would be underestimated, she would fail to comprehend for some time the allure of the profit motive on the part of her bosses. Money was venerated in these circles like a god.

The sanctity of money to these people became clear to her for the first time at the “graduation” meal she and her fellow rookies were treated to upon completion of the ninety day training period. The handful of planners who had survived the ordeal were lauded by management as the “cream of the crop”. In other words, just to make it as far as they did meant they had the potential to make a thirsty band of cutthroats indeed.

But Marcia was always cognizant of not fitting in entirely, that she was unlike most of the other newbies. For one thing, she seemed to be the only one to make it through training with her conscience still intact. She was sure, either owing to greed or to cowardice that not one of her colleagues would fail to sacrifice his soul on the altar of profit if the occasion ever presented itself. On the other hand, she genuinely enjoyed being a stockbroker. She resolved, therefore, that though she had been thrust into a pit of snakes she would take a full measure of satisfaction in providing quality service to her clients.

Always adept at getting to the essences of things, she was astute as well in quickly determining what would be required of her in her new profession. She found that ethically she could not go far wrong if she subjected all the advice she gave her clients to the “mother test”. This meant that with every trade she asked herself if she would follow the same course if it were her mother’s money she was handling. She accorded the mother test the highest esteem as her most trustworthy guide, and which summed up for her the CFP code of ethics as concisely as the golden rule encapsulates the Ten Commandments.

Idealism Confronts Reality

It was a daunting task, like Serpico’s in staying off the take, keeping herself free of the taint of dishonesty with which all the veterans at HSBC Securities seemed to be marked. During her probationary period, for instance, she often heard the phrase “churn ‘em and burn ‘em” used to describe the ordinary business practices of the established IAs at her firm. For the uninitiated, “churning” is a term of art which describes the practice of making trades on a clients’ account for no other purpose than to earn more commission. There is uniform disapproval of churning, not only by the regulators, but by the firms themselves. There is also, however, widespread disingenuousness in this regard. Every firm uses a “grid” system for determining an IA’s rate of compensation, which all but ensures that those who earn the highest commissions from their books of business, and if it is by churning, so be it, are most amply rewarded.

Marcia and her fellow rookie IAs found it humorous, in a grim sort of way, that the established brokers at HSBC Securities seemed incapable of earning an honest living. She had not yet realized that the system itself virtually mandates a certain degree of corruption. One is reminded of a line delivered by Denzel Washington in “Training Day”: “You gotta have a little dirt on you for anybody to trust you.” This certainly describes the mores of those with whom she would now be sharing offices; and churning was merely a symptom of a larger disorder, a more virulent disease. The entire industry was afflicted.

It is worthy of note that it was the regulators, not the firms, who established the ninety-day training criterion for rookie IAs. The firms were duty bound on pain of sanctions to provide this training, and they fulfilled their duties as wholeheartedly as if they were forced to eat dung. Those requirements, which were deemed too burdensome, such as having a fledgling IA “shadow” a veteran broker, were simply ignored.

The collective attitude of the established brokers towards compliance issues, and by extension towards customer service, was beyond cavalier. One of these veterans used to make the preposterous claim to prospective clients that “he never lost money for his clients.” Nor was the office manager any more ethical. The wealthiest client whom Marcia had brought over from the bank was not only stolen from her, but her manager then proceeded to lose money on company shares he had purchased on the clients’ account that he, the manager, had been expressly instructed not to buy.

When a fledgling IA is still in training she is prohibited by the securities regulations from making trades on her own. Consequently, a day came when Marcia was obliged to have her manager process some mutual fund purchases. Rather than simply abide by the clients’ instructions he manipulated the purchases in order to “earn” for himself a higher commission. In other words, he churned them. Marcia was finding the taste being left in her mouth by the brokerage business was becoming more unsavoury by the day.

It would be fair to describe the regimen the rookie IAs had just undergone as more a baptism by fire than a ninety day training period. It seemed a little rich, moreover, to be thought of as “the cream of the crop” simply for having survived the ordeal. But Marcia emerged from her probation only to have to endure still more tribulations. All the established IAs eschewed mentoring as nothing more than a species of babysitting; they undertook no activity, which did not have a dollar sign at the end of it.

So her expectations were already low when the branch manager moved on. The firm continued to do business with no one running the office at all for several weeks, a further infringement of securities regulations. With no one supervising the rookies at the Victoria office, Marcia and the others were instructed to contact the “acting” manager in Vancouver if they ever required assistance. When she sought to take this advice, however, her telephone calls were never returned.

By now it was clear to her that if she was ever to learn the ropes she must do so on her own. Much to the future chagrin of the executive at HSBC Group, she carried out her resolution in short order. She spent countless unremunerated hours coming to grips with the machinations of the market and before long had become remarkably adept at spotting the trends; so adept, in fact, that she actually developed her own trading system. She logged onto the Internet at home and began making “trades” on a “play portfolio” she had put together. Before long she was consistently out-performing the “experts”. Clearly, any legitimate securities firm ought to have been thrilled to have landed such an ingenious and industrious rookie advisor.

But when, as in the financial services industry, the inmates are running the asylum, signs of incipient sanity are regarded with suspicion. Qualities such as resourcefulness and honesty are as cancers to such a system; they must be ruthlessly excised lest they be considered the norm. Too much integrity and the system would grind to a halt. Marcia never got a chance to implement her system for real, even though she had clients interested in signing on for it. After thirty years in the business, first as a banker, then as a financial planner, and finally, as an honest broker, her career was shot down, or perhaps more accurately, drowned in an ocean of corruption.

Corruption at the Top

She remembers it well, the day she caught HSBC Asset Management, the subsidiary of the HSBC Group which manages pooled funds accounts for generally wealthy clients, in flagrant delicto. The victim of the malfeasance was a seventy-nine year old widow, another client with whom Marcia had had dealings while she as still an MIS.

It started with a breach of securities regulations, of a sort, which had become routine, and generally attracts a routine fine as a token punishment. A certain portfolio manager at HSBC Asset Management became seized with the compulsion to gamble with the clients’ money as though it was her own. This manager has since left the firm under suspicious circumstances and, indeed, appears to have forsaken the entire industry. What she did was, speculating that the market was poised for a rise, upped the clients’ ante; she unilaterally altered the mandate which the client had signed up for.

There are clear guidelines for establishing and changing investment mandates set out here and there in the forest of securities regulations. They can all, however, be generally subsumed under the “Know Your Client” (KYC) rule. Not surprisingly, this rule dictates that any changes to a mandate are only valid if they are made with the client’s full knowledge and consent. The evidence of such consent would be a duly executed KYC form.

In the case of this elderly widow, perhaps complying with the KYC rule would have taken too long for the market to remain in its presumably advantageous position. Or the manager might have balked at the difficult task of explaining a controversial decision to an unsophisticated investor. Whatever the reason behind the manager’s ignoring the KYC rule, the fact remains that there was no new client signature on any new form. Then the market failed to perform as the portfolio manager expected. Marcia’s client-- as well as every other pooled fund client across the country invested in the same portfolio-- was made to suffer greater losses that she should have.

Nor was this the doing of a rogue portfolio manager. Rather, the decision was clearly taken at the highest levels of Asset Management’s executive. The motivation appears to be of the crassest sort, simple greed, and after the fact, with sheer cowardice.

Predictably, the poobahs at HSBC Group desired to resolve the matter internally, and took the position that the portfolio manager in question had properly exercised her discretion. It was submitted, incredibly, that the client—and by extension all other pooled fund clients invested in the same portfolio-- had authorized the manager to alter the mandates whenever she felt like it, and thus was not liable for the excessive loss.
In a letter to Marcia’s client dated August 27,2001, the Chief Executive Officer of HSBC Asset Management, Stephen Baker, makes these astonishing claims:

As mentioned above, in modifying asset ranges and implementing increased exposure to equities we were carrying (sic) our responsibility of discretionary investment management. These changes while not announced were communicated. The actual increase in equities was shown in the HSBC Pooled Fund Review for Q1/01 dated April 2001, in the section “Model Portfolios for Investors”, copies are provided to investment advisors. You signed an investment management agreement authorizing us to use our discretion within your investment mandate, which is what we have done.

(emphasis added)


In other words, according to this amazing logic, the changes were legitimately made because the clients’ consent was inferred from her being informed of them after the fact. Baker’s assertion, moreover, that the changes were “communicated” to the advisors even though they were “not announced” is either pure unvarnished gobbledy-gook, or a bald faced lie; so too was his incredible statement that in unilaterally upping the client’s ante HSBC Asset Management was acting “within the mandate”.

Ethically, Marcia now found herself at odds with yet another subsidiary of HSBC Bank Canada. Once again she resorted to the mother test and determined her fiduciary duty to her client outweighed the personal interest in maintaining a smooth relationship with HSBC Asset Management. She directed a letter to Stephen Baker dated September 7, 2001 in which she informed him of her duty pursuant to rule 302 of her CFP Code of Ethics, which provides:

Rule 302

A CFP licensee shall offer advice only in those areas in which the CFP has competence. In areas where the CFP licensee is not professionally competent, the CFP designee shall seek the counsel of qualified individuals and/or refer clients to such parties.

Marcia interpreted this rule to mean she was duty bound to refer her elderly client to a lawyer. Indeed, as any lawyer would argue, the words “shall” set out in Rule 302 evince that she had no discretion to do otherwise.
It was beyond dispute that HSBC Asset Management had committed an actionable offence. This client, however, was far more generous to her portfolio manager than she ought to have been and settled for an ex gratia payment to her account, a pittance of what she would have been awarded by a court. The fact remains that she would have had a valid cause of action even if the market had gone up.

That HSBC Group was so anxious to resolve the matter internally is also noteworthy. The executive was well aware it was in a precarious legal position, that if wrongdoing was admitted in one case, the liability would have to accrue in regard to all the other pooled fund clients invested in the same discretionary account across the country.

By the time Marcia wrote her letter the firm had hired a new branch manager, Barry Clark. He called her into his office one day and informed her that “they”, meaning the executive at HSBC Group, “didn’t like her letter.” She was told that if she referred her client to a lawyer or if she got the regulators involved she would be asked to leave the firm. Marcia replied that because she had done nothing wrong she had no intention of leaving. Moreover, Asset Management had itself suggested on a prior occasion that Marcia have a client seek independent legal advice before investing in a pooled fund account. Clark expressed the opinion that she would be given a severance package, his rationale being that she should “not shit where she sleeps”. This from the representative of the firm, which had demanded she maintain her CFP license in good standing. She was now being threatened with the loss of her job if she did not jeopardize her license by wilfully breaking rule 302 of her code of ethics. She was also well aware that the banking regulators also have requirements, such as signing a yearly statement that no malfeasance was witnessed at the branch she was working at, upon which her continued employment was conditional.

If she felt she was rudderless during her probationary period she was now even more adrift. She was floating on a sea of corruption which threatened to engulf her at any moment, and that proved to be even deeper that she expected once she got the regulators involved.

First, she filed a formal complaint report with the BCSC against HSBC Asset Management. Upon hearing the substance of the complaint, the investigator who took her statement made a telling observation. His first reaction was to exclaim that “we could shut them down” if the substance of the complaint was found to have merit, that is, if the firm had committed so egregious an act as to unilaterally alter the mandates on one class of its pooled fund accounts. After all, CIBC is now defending itself against a class action for doing precisely the same thing with certain of its mutual funds.

Marcia also filed concurrent complaints against her own firm, HSBC Securities, for other ethical breaches. One of her colleagues, for example, determined that the pickings for new clients were better if he operated out of the bank branch, even though it was not licensed for him to sell securities. Another IA had failed to comply with the KYC rule before executing a trade for a client.

It seemed to her that the Superintendent of Financial Institutions ought to be interested in how HSBC Bank was being wilfully blind to the goings on at one of its branches in allowing unlicensed securities activities. When she directed a letter to that august body, however, she found its representatives did not want to get within five hundred miles of the stench emanating from he HSBC Group in Victoria. The office of the superintendent refused to exercise jurisdiction; instead, it passed the buck to the Investment Dealers Association (IDA) in British Columbia.

The IDA agreed that it was a serious breach to operate out of an unlicensed bank branch and informed Marcia that the matter would be addressed when the firm was next audited. Her complaint regarding the failure of an IA to comply with the KYC rule, however, disappeared into a bureaucratic black hole. The IDA never even acknowledged receipt of her letter.

The Financial Mafia

In the meantime, the BCSC had concluded its investigation of Asset Managements shenanigans on its pooled fund portfolios. The conclusion, which was arrived at, if ever widely known and disseminated among the investing public, would in all likelihood call into question the BCSC’s very legitimacy. HSBC Asset Management, it was determined without giving reasons, had committed “no clear violation” of securities regulations when it changed the mandate on an entire class of its pooled fund accounts.

The fraudsters received not so much as a reprimand. The clients who lost money were figuratively spat upon by the very agency charged with upholding the public trust. Further, in whitewashing the sins of the portfolio managers, and in suggesting the clients’ losses could be chalked up to a bad day for the market, the BCSC made itself an accomplice to the malfeasance.
It is an open question the degree to which the incestuous relationship between the HSBC Group and Steve Wilson, the BCSC’s executive director, played a role in the plainly erroneous decision. It is certainly fortuitous that prior to his appointment to the regulatory agency’s directorship Steve Wilson was the former President of Hong Kong Bank of Canada Securities, former Vice President of HSBC Asset Management Canada and former Vice President of Hong Kong Bank of Canada.

Make no mistake; what the BCSC had done was a real paint job, a whitewash of the first order. This is proved by the agency’s own audits of pooled fund accounts for the past several years. Not only were infringements of the KYC rule found to have occurred in every year, they were among the five most frequent infractions committed by portfolio managers. In other words, that HSBC Asset Management had violated securities regulations in regard to Marcia’s client was abundantly clear, despite the BCSC’s bogus finding to the contrary. The firms that were audited were even warned that continued flaunting of the KYC rule might well attract civil liability in addition to administrative sanctions for non-compliance.

As if this were not enough, the Ontario Securities Commission (OSC) came to precisely the same conclusion in its annual reports for 2002 and 2003. The OSC also decried the cavalier attitude towards compliance evinced by the firms which were audited, including HSBC Asset Management. Just as with the BCSC’s recommendations, the OSC’s conclusions were treated with almost palpable derision, as though they were idle threats uttered by a feckless schoolmarm. The KYC rule continues to this day to be routinely ignored; new audits are commissioned and the findings presented to the subject firms with a nudge and a wink and an empty promise extracted from them to “do better” in the future.
It cannot be stressed enough that the raison d’etre of agencies such as the provincial securities commissions is the protection of the public interest. This is effected when it can be plainly seen that the financial services industry is operating with the utmost integrity. The reality, however, is just the opposite; the regulators in fact carry out their functions with the most calculated hypocrisy.

The most felicitous comparison -- and this is no hyperbole -- is with organized crime. Advisors like Marcia are regarded as “soldier earners” and are subjected to the most intrusive forms of nannyism by the regulatory bodies. The idea is an old one: throw the authorities a few little fish to fry so that the big ones can continue to operate with impunity. These advisors are so routinely scapegoated that they are not even allowed to purchase error and omissions insurance.

The old boys’ network (and they are always boys), on the other hand, the presidents, vice-presidents, CEO’s, and so on, have the status of “made men”. They even have their own regulators staffed entirely by similarly “made men”. They also have their own “argot”; to use a word of Jean Genet’s in describing the language of the French underworld. Marcia suspects that government is utterly ineffectual in regulating the industry because elected representatives cannot even understand the lingo. It was for this reason alone that the “made men” came to undermine the legitimacy of the regulators' authority.

The irony in all of this-- and it is a bitter one -- is that the only one floating on this cesspool, the only one actually looking out for the interests of investors, are the little “soldier” IA’s like Marcia. It is these individual advisors who bestow any integrity at all upon the system, and who most often take the fall for the ethical failings of the whole profession.

The Unsung Hero

For her part, Marcia never set out to become a hero. She simply did not have a dishonest bone in her body, and was tired of being unable to do her job without daily having to confront the corruption all around her. The mantle of guardian of the integrity of the industry was passed to her in spite of her protestations. But adversity has a way of seeking out the most courageous, and for her heroism she lost everything. Everything, that is, except her soul.

The mucky-mucks at the HSBC Group, after establishing the nearly impossible requirement that Marcia maintain her CFP license in good standing, now sought retribution for her taking her code of ethics seriously. Some of her trailer fees were simply withheld, without explanation, so too were monies which were owed to her pursuant to the short term disability plan she was obliged to resort to when her struggles with the system left her clinically depressed. Then when she sought to assert her contractual rights and demanded to be paid the monies that were owed her, her efforts were construed by the bank’s personnel manager as constituting her resignation. This position is shown to be even more absurd when it is born in mind that Marcia was not even employed by the bank any longer. It can hardly be a coincidence, moreover, that her wrongful dismissal occurred on June 6, 2002, on or about the very day on which Paul Martin’s resignation as Canada’s finance minister was tendered by Jean Chretien.

The vindictiveness and sleaze of the executive of HSBC Group hit new depths when Marcia applied for employment insurance. Her record of employment was deliberately withheld for several weeks so that her claim could not be processed in a timely fashion. Then when the document was finally delivered to the employment insurance commission it contained the libellous assertion that Marcia had resigned her position. The libel had its desired effect and her claim was denied, her premiums disappearing into to $844 billion fund the commission “administers”.

It had been an inferred condition of employment at HSBC Group that any personal debt will be obtained from the employer bank. During the course of her employment, Marcia had on two occasions given mortgages to the bank, one on her home and one on a townhouse she owned as a rental property. Immediately upon her being wrongfully dismissed Marcia put both properties up for sale and in the most shamelessly predatory manner the bank attempted to foreclose on both. They had complete records of her financial status and were well aware her loss of employment meant she would be unable to maintain her payments.

Next, the transfers out of her RRSP’s were inexplicably delayed. The cause of the delay was said to be simple bureaucratic bungling, but it cannot be denied that it was in service of a covert campaign to crush Marcia by any available means. If she did not have enough money even to live on she would be hard pressed, after all, to assert her legal rights and commence an action for wrongful dismissal. Nonetheless, Marcia overcame and her action is currently before the courts.

In the end, though they tried to kill her spirit, they succeeded only in murdering her career. The last straw came when the Financial Planners Standards Council showed itself to be as feckless and two-faced as every other agency charged with regulating the financial services industry. When news reached the council that Barry Clark had advised Marcia to commit a fraud, the branch manager was not sanctioned in any way. When Marcia declared bankruptcy, as she was obliged to do, she advised the Financial Planners Standards council and lost her license until she was discharged from bankruptcy.

Bankruptcy has proven to be an insurmountable obstacle to Marcia’s obtaining other employment as well. One firm after another has remarked upon her impressive credentials, while citing a policy, which prevents them from hiring someone who has gone bankrupt, regardless of the circumstances. The absurdity of such a policy can be readily demonstrated, for it is akin to a doctor being stripped of his medical license because he has had a heart attack.

So in sum, Marcia lost her profession, at which she was earning in excess $120,000 a year; her impeccable credit rating was destroyed, and all her savings had to be liquidated; she lost her home, her rental property, even her BMW; and she lost all her health, life and disability insurance benefits. All of these factors establish that the death of Marcia’s career was indeed a homicide; it cannot be contributed to any natural cause.

It was unavoidable that her reputation would be tarnished, even though it is widely accepted that she was an honest broker. Anytime an IA makes an abrupt disappearance suspicions are bound to arise in the minds of her former clients. No doubt the HSBC Group has invented some kind of cover story to satisfy the more inquisitive.

Marcia’s pride, however, is very much intact, and so too is her conviction that she would do it all over again. Someone has to try. The financial services industry has become a leviathan ever since the banks began their overreaching, a veritable ogre of corruption, consuming anything in its path, including its own rules and regulations, like so much grist for the mill. She has taken a few scars on her soul, but she is proud of them too, because they serve to remind her that she was able to hold onto her soul, though the whole world might have been taken from her.

She intends to get it all back. Her career might have been murdered, but she herself is very much alive. She is ready once again to take up her calling as the official thorn in the side of the financial services industry, and to vindicate herself in a court of law.

In Requiem

So it is fitting at this time that this coroner’s report becomes a eulogy we should bow our heads and observe a moment of silence. Thus do we pay our respects to the ideals, which Marcia’s career stood for, the integrity of the financial services industry and the preservation of the public trust in relation thereto? It is fitting that we say a prayer as well, in memory of what should have been a thriving career, cut short in the bloom of its youth.
We should say a more fervent prayer, a lamentation, in fact, for the financial services industry as a whole. Truly its institutions are sick unto death; truly, it is dying of cancer. Already the disease has spread and has all but consumed the integrity of the regulatory agencies mandated to hold the cancer in check.

But above all, pray for the individual investor, that God may guide him though the valley of the shadow of corruption and into the arms of another honest broker like Marcia.

Let not this death of a saleswoman be in vain.

Finis
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Re: whistleblowers

Postby admin » Sun Dec 27, 2009 12:01 pm

After many years of study, and a bit of personal experience with telling the truth to power, or questioning self serving decisions of power, I have learned this:

Those in power often do not want someone who will question, will probe, and challenge. This makes sense when I look back on it, but when going through it, it is almost inconceivable that persons in power would want to knowingly damage others, their reputation, or the reputation of their company or office. It just does not make sense to the truth teller, does not compute from the perspective of the whistleblowing employee.

What the employee cannot grasp is the personal motivations inside the man or woman (more often man) who is trying to control the situation to his advantage. All the whistleblower can see is a liability to the organization and damage done to the public at large. The abuser sees so much more. He sees money, power, promotion, glory, a chance to grasp a rising star. In light of these visions he finds it easy to risk the organization, especially since he feels there is little risk of being caught.

Especially, if he has absolute control over subordinates. Who is going to tell on him? This is why employees who are "yes" men are often more highly valued than those who will question. A "no" man might just get in the way of grasping that rising star. Might question the morality or the ethics.

This brings an unusual set of circumstances into play. Where a system allows (protects) "yes" men and actually punishes those who question abusive practices, there is often a breakdown that occurs, where the motivation is to look the other way, to "see no evil".

Imagine a society run by this process, this mentality? It is capitalism run wild. Survival of the fattest, the meanest, the dirtiest players on the planet.
It is the kind of "system" spoken of in the book "THE LUCIFER EFFECT" which breeds things like the NAZI party in the Germany of old.

We need to openly deal with this issue. It is one of the foundations of a civil society, and if it is missing, we of course have no chance in the long term.

See HUMANISM, or CAPITALISM 2.0, in the blog at http://www.breachoftrust.ca as a concept where capitalism is enhanced with the addition of "accountability and responsibility" and a system of public and private inspections, checks, balances and enforcements that are intended to ensure that an entire industry is born to protect these essential elements of a civil society.

Like the environmental industry, born of need, and becomes a win win for society and the world, the "humanity" industry might be able to create some fairness and protection from abuse by powerful elites. Or it might be just my imagination, runnin away with me.................
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Re: whistleblowers

Postby admin » Wed Dec 23, 2009 7:54 pm

here is a tiny glimmer of hope for those who try to reveal the truth about activities that others might wish to keep silent



Canada court increases libel protections
By CHARMAINE NORONHA (AP) – 4 hours ago
TORONTO — The Supreme Court of Canada strengthened protections for journalists and bloggers in a pair of rulings, hailed as a victory for press freedom in a country with especially stringent libel laws.
Tuesday's rulings involving the Toronto Star and Ottawa Citizen newspapers, created a new responsible journalism defense giving reporters more leeway to pursue controversial stories as long as they are deemed to be in the public interest.
In both cases, the justices ruled 9-0 in the newspapers' favor.
Lawyers called it a major step toward reducing so-called "libel chill," where journalists back away from contentious stories for fear of being sued.
The rulings mean journalists cannot be held libel for factual errors in stories deemed to be in the public interest so long as they take a series of steps, outlined by the court, to ensure fairness.
Writing for the court, Chief Justice Beverly McLachlin said Canada's existing libel defenses were too restrictive and contrary to the free expression guarantees in Canada's constitution.
"Freewheeling debate on matters of public interest is to be encouraged and the vital role of the communications media in providing a vehicle for such debate is explicitly recognized," McLachlin wrote in one of the two rulings. "While the law must protect reputation — the current level of protection — in effect a regime of strict liability — is not justifiable."
One of the rulings upheld an Ontario Court of Appeal decision striking down Ontario businessman Peter Grant's $1.5-million Canadian (US$1.4 million) libel award against the Toronto Star and ordered a new trial.
A lawyer for the Star, Paul Schabas, told The Associated Press that the rulings are a major step toward bringing Canada's archaic defamation law into line with other nations like the United Kingdom and Australia.
"It's a historic decision. The most important libel decision ever decided by the Supreme Court of Canada," said Schabas.
Robert Cribb, an investigative reporter for The Toronto Star and journalism professor at Ryerson University praised the decision saying it would enable Canadian journalists to do far-reaching, controversial stories similar to their American counterparts.
"It's a fabulous victory, much anticipated and awaited," said Cribb. "I'm on the board of an American organization of investigative reporters and editors, and ... they are able to do stories that are more difficult for us to do here because the restrictions have been so tight so until now."
The other case, had to do with an Ontario Provincial Police officer who was awarded $125,000 Canadian (US$119,000) after the Ottawa Citizen produced a series of articles casting his unauthorized trip to New York City after the Sept. 11 terrorist attacks in a negative light.
The Supreme Court ordered a new trial striking down Danno Cusson's financial award. "It brings us into the 21st century," said Richard Dearden, a lawyer representing the Ottawa Citizen. "It's a huge victory for the freedom of press in terms of the types of stories you can publish up here and not be sued for libel."
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Re: whistleblowers

Postby admin » Thu Nov 12, 2009 4:34 pm

sc0024edc4.jpg
Neuroscience and Emotional Harm in Tort Law: Rethinking the American Approach to Free-Standing Emotional Distress Claims

Betsy Grey
Arizona State University - College of Law
http://ssrn.com/abstract=1499989

November 4, 2009


Abstract:
American tort law traditionally distinguishes between “physical” and “emotional” harm for purposes of liability, with emotional harm treated as a second class citizen. The customary view is that physical injury is more entitled to compensation because it is considered more objectively verifiable and perhaps more important. The current draft of the Restatement of the Law (Third) of Torts maintains this view. Even the name of the Restatement project itself - “Liability for Physical and Emotional Harm” - emphasizes this distinction. Advances in neuroscience suggest that the concern over verification may no longer be valid, and that the phenomena we call “emotional” harm has a physiological basis. Because of these early scientific advances, this may be an appropriate time to re-examine our assumptions about tort recovery for emotional harm.

Using studies of Post Traumatic Stress Disorder as an example, this paper explores advances in neuroscience that have begun to shed light on the biological basis of the harm suffered when an individual is exposed to extreme stress. These advances underline the shrinking scientific distinction between physical and emotional harm. Drawing on these scientific developments, as well as on the British approach to emotional injury claims, the paper concludes that we should rethink the American treatment of emotional distress claims. In general, it proposes that we change our approach to account for advances in neuroscience, moving toward a more unified view of bodily and emotional injury. Two potential legal applications are advanced in this paper: (1) that science can provide empirical evidence of what it means to suffer emotional distress, thus helping to validate a claim that has always been subject to greater scrutiny; and (2) that this evidence may allow us to move away from the sharp distinction between how physical and emotional injuries are conceptualized, viewing both as valid types of harm with physiological origins.

Keywords: Tort, Emotional Distress, Neuroscience and Law

What if whistleblowers were to begin to hold corporations accountable for the retaliatory damage they do to employees who tell the truth about corporate wrongdoing?
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Re: whistleblowers

Postby admin » Tue Nov 03, 2009 4:37 pm

Constant Gardner is a wonderful movie, based on true events of a truth teller in the pharmaceutical industry. Well worth a view.

The Insider is also very compelling story of a tobacco company employee who goes through the wringer trying to prevent abuses by this industry.

There is another one about a nuclear plant whistleblower who was killed under unusual circumstances, I think it is THE CHINA SYNDROME, but not certain.

There are others based on true events and these will be published as they occur to me.

One will be produced based on Canada's most predatory investment salesperson, and the death of a former employee, after legal harassment drives the employee to take his own life. Based on true circumstances as well.
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Re: whistleblowers

Postby admin » Thu Sep 03, 2009 2:22 pm

images.jpeg
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When a person tells the truth or corporate or organizational wrongs, he or she is stepping outside the system. They are placing the loyalty to the public interest ahead of a loyalty to their corporation or organization. This is an honorable thing, to all except the organization.

The organization will react much like a body's immune system, which is always on guard, always alert to threats to itself. Like the immune system, an organization will try to find, surround, attack and remove any and all threats to itself. This is not pretty when a person is on the attack end of the system.

It is not that the people in the organization are bad people, but they are part of a system which places them in a unique position where they must act in the manner that they do. Read, THE LUCIFER EFFECT, by Philip Zimbardo for more on how this works.

In the end, if you tell the truth, about your organization on matters which impact the public good, no matter how poor, how dangerous, or how deadly the behavior of your organization is (exploding gas tanks, bad drugs, weapons, chemicals, nuclear power), if you place your loyalty to the public good above your loyalty to the organization, you will be hunted like a virus inside the human body.

I maintain that it is still the right thing to do. It is still more human and more humane to tell the truth when you come to the realization that your organization is damaging other humans, the planet, or the economy etc. To do less than that is nothing but subhuman self preservation on the part of the discoverer. Unfortunately, the vast majority of us fail to place humanity above self preservation. That is the normal unconscious human condition default. We need to try and rise about this level of unconscious-ness.

What are the effects on a person who goes outside the organization (or within) and tries to reveal the truth about organizational wrongs? I found an commentary in the Globe recently that pretty much sums up some of the greatest damages, after you have lost your job of course, your career, perhaps your home and family. The commentary was by Michael Kirby, Chair of Mental Health Commission of Canada. His article appeared wed, aug 26, 2009 on page A13. The parts that I circled as having direct application to the whistleblower were this:

"In both natural disasters and man-made economic ones, people lose businesses, jobs, homes, hopes, lives. Each type wreaks a devastating toll on the mental health of its victims - lost jobs and livelihoods cause great psychological distress and increased rates of anxiety, depression, child neglect, family violence, substance abuse, crime and suicide."

"There is very solid data correlating unemployment and personal financial stress with increased mental-health problems, including higher rates of depression and suicide."

"......the daily lives of individuals, their families and whole communities are torn asunder by financial loss, unemployment, fear and declining physical and mental health."

A sane man who agrees with this would avoid it. To do this means to take the easy way out, and preserve yourself at the expense of damage to other humans. That is simply not right. The right thing to do is to fight to change this "automatic torture process". Fight so that corporate abuse, financial and legal abuse are no longer tolerated as tools of human torture in todays world. Other forms of abuse have come into the open, and have slowly, over decades been admitted, discussed and de-powered. It is a matter of social justice for every human that whistleblowers and the abuse they suffer is also eradicated.

Been there. Done that.
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Re: whistleblowers

Postby admin » Mon Aug 03, 2009 8:02 pm

Killing by influence on the mind

228. No person commits culpable homicide where he causes the death of a human being

(a) by any influence on the mind alone, or

(b) by any disorder or disease resulting from influence on the mind alone,

but this section does not apply where a person causes the death of a child or sick person by wilfully frightening him.

R.S., c. C-34, s. 211.

(believe it or not, I have seen this crime in action, within the financial services industry. It is one of the reasons for deciding to make a film of the journey I have been on. I hope I can safely tell the story some day. It deserves to be told)
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Re: whistleblowers

Postby admin » Thu Jul 02, 2009 8:46 pm

money

Tuesday, Jun 30 2009
Barclays salesmen lift lid on 'fleece the customer' culture

By James Salmon
Last updated at 9:50 PM on 23rd June 2009

THE WHISTLEBLOWERS

Salesman A left Barclays last summer after more than 20 years, 11 as a financial adviser. Aged 40, he now works as an adviser for another firm.

'Before Barclays started selling Aviva Global Balanced Income fund, there was a group meeting and we were given a 20-minute presentation followed by a discussion. The brochures we were given left me with the impression the fund was relatively secure - even during falling markets.

'I now feel we were misled about the risks. I shouldn't have trusted what we were told, but you just assumed that someone would have done their research and known the risks.


Money grabber: Nationwide building society's TV advert pokes fun at the shortcomings of a 'typical' bank salesman

'I wanted to be an adviser, not a salesman, but I quickly felt this was impossible at Barclays. The emphasis seemed to me to be all on numbers - how many meetings you could set up and how many products you could push.

We had to set up a minimum 16 appointments a week and take in £11,000 to £12,000 a month to get a bonus.

'If we failed, Barclays would take the money we generated. For me, this created a culture of selling for the sake of selling rather than doing what's good for the client. I just couldn't do this any more.

'There was also a very limited number of products we could choose from. The Aviva Global Balanced Income fund was one of the few that offered a high level of income.

'The sales culture got worse three to four years ago. There were greater and greater demands on employees to justify their salary. Every two years, our pay structure was changed, so we had to sell more and more. In my last year, I did 30 per cent more business and earned 17 per cent less in bonuses.'

Salesman B left Barclays last year after almost ten years. He is now an independent financial adviser.

'Working at Barclays was a pressure situation. If you didn't make a certain amount of calls in a day, you had to stay in the office for as long as it took.


It seemed to me to be completely sales-orientated - you felt as though it was your job to squeeze the maximum commission you could out of a customer.

'For us, the target was to bring in around £15,000 commission a month. We did this by charging 3.75 per cent on most sales. Banks take all the commission up front, so there was no incentive to see these people again.

'If you didn't meet your targets, you were put on a "personal improvement plan", which was really a way of trying to squeeze you out. Those who missed targets were put on daily reporting or even hourly reporting, where your supervisor constantly called up to check on you.

'I invested £1million for a client at the end of 2005, and the commission was in excess of £70,000. It took me about 12 hours to complete, including visits to the client and making the recommendations. I suggested to my sales manager that the commission was bordering on the obscene and we should give a large slice of it back.

'I was told not to mention a word to the client, as that commission would meet the team's sales target for the month.

'As soon as a certain amount of money came on to a client's balance - I don't know what the trigger amount was - the bank got a text message and contacted the client to arrange an appointment.

'In my experience those that did best for the bank tended to be the advisers who would "realign portfolios" - that was persuading customers to sell one investment and buy another.'

'I went to Barclays naively thinking I was going to be an independent financial adviser. I'm now looking after several customers I advised when I was at Barclays for free because I feel so guilty - one customer is a two-hour drive away.'

Salesman C, 36, joined the bank in 1999 and left in 2007. He now works as a financial adviser in Glasgow.

'I was sent the details of the Aviva Global Balanced Income fund in an email. My understanding was that the fund would provide a high level of income and was balanced risk. It was virtually the only fund of its type available for those wanting income.'

'I remember selling to two retired people. They were balanced or cautious-risk investors and needed an income to top up their pensions. One of them is with the Financial Ombudsman Service at the moment. They invested £135,000, which shrank to about £85,000. If this fund had been marketed as high risk it wouldn't have been sold.

'Every year the top salespeople were taken on expensive trips overseas. I went on lots of these trips. One year we stayed at the Ritz Carlton in San Francisco and another year we went to the Al Qsar in Dubai.

'We had to make as many appointments as possible and earn around £12,500 for Barclays to qualify for a bonus. I got into trouble for organising annual reviews for clients. I was told that the bank didn't make any money from that.'

They turned £51,000 into £28,119


Stan Richardson: Given bad advice

World War II veteran Stan Richardson, 89, says he was visited by a Barclays salesman at his home in West Sussex in October 2006. He was looking for a low-to-medium-risk investment which would give him an income to supplement his small pension.

Mr Richardson says Barclays advised him to sell the portfolio of shares he had held for many years and put the money in the Aviva Global Balanced Income fund. The advice proved disastrous.

The £51,000 invested is now worth just £28,119. In the six months from April 10, 2008, to October 9 alone, the fund slumped 28 per cent from £42,939 to £29,149, having taken out just £1,616 as income.

Unlike many victims of the Barclays scandal, Mr Richardson counts himself as a fairly knowledgeable investor.

For years he had held a portfolio of shares and done fairly well at investing, but he wanted something safer and was described by Barclays as a balanced investor.

But the fund Barclays recommended was only suitable for investors willing to take a high degree of risk.

Mr Richardson, who joined the Navy in 1936 and served on aircraft carriers in the Far East, says: 'I rang my Barclays adviser who advised me to hang on, as it would get better. But at almost 90, I haven't the time to hang on. I struggled to get my little nest egg for my retirement. I was told this was a balanced fund but there was nothing balanced about it.'

WHAT BARCLAYS SAYS

'Barclays' financial planning advisers are highly trained and our remuneration structure ensures that our advisers are not biased toward any product or provider. We have extensive business controls in place to ensure we retain a high standard of service.

'Barclays also has a group-wide "Raising Concerns" policy that obliges staff to report, independently of their management lines, any instructions or suggestions
that they feel improper. Barclays has a robust process in place for dealing with all customer complaints, and where customers feel dissatisfied they are entitled to take the issue up with the Financial Ombudsman Service.'

HOW TO COMPLAIN

Money Mail has passed a dossier of your complaints to Barclays chief executive John Varley and City watchdog the Financial Services Authority. But it is crucial that you lodge an official complaint with the bank yourself.

If your complaint is rejected by Barclays, you should go to the disputes arbitrator the Financial Ombudsman Service (020 7964 0500). Explain clearly why you think you were misled about what you were investing in or given poor advice.

Remember - the fact that the fund has lost money is not cause in itself for complaint. It is the quality of advice that is crucial. The key with the Aviva Global Balanced Income fund is that it was high-risk, but was sold by Barclays as balanced - or medium risk. If you were classified as a low or medium-risk investor, this should strengthen your case.

A similar complaint might apply to the Aviva Global Cautious Income fund, which claimed to be for cautious or 'risk averse' investors.

Other key reasons for complaint might include if all or most of your money was put in one fund or if you're elderly and wanted low-risk or were likely to need access to your savings. Gather as many of the sales documents as you can as evidence.

Photocopy these and send them off to the bank - although they should also have copies. There are some handy tips on how to make sure your complaint is taken seriously at www.financial-ombudsman.org.uk.

Do not go to a claims handler. They will take a proportion of your compensation. It is your money, so why give it away?
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Re: whistleblowers

Postby admin » Thu Jul 02, 2009 8:36 pm

Getting Laid-Off May Lead to Early Death -- But There Are Ways to Cushion the Severe Health Impact of Job Loss

Studies show that the current economic climate may be eroding months or even years from the lives of those on the bleeding edge of insecurity.

By Tom Jacobs, Miller-McCune.com
Posted on July 1, 2009, Printed on July 2, 2009
http://www.alternet.org/story/141021/

When you lose your job, with no prospect of finding another one quickly, you give up a lot more than income. You are deprived of a sense of security, a source of self-esteem, a certain status in the community. And, according to recent research, you also lose something even more precious: a year or more of your life.

That's the conclusion of two prominent economists, Daniel Sullivan of the Federal Reserve Bank of Chicago and Till von Wachter of Columbia University. Matching death records with employment and earnings data of Pennsylvania workers from the 1970s and '80s, they found mortality rates for high-seniority male workers spike sharply in the year following an involuntary job loss, and they remain surprisingly high two decades later.

If this higher death rate persists into old age, it implies "a loss in life expectancy of 1 to 1.5 years for a worker displaced at age 40," the researchers report. Or as von Wachter puts it more informally: "We were convincingly able to show that if you lose your job, you die earlier."

But the risk of premature death isn't limited to those who have actually been let go. A growing body of research suggests a nagging, persistent fear of losing one's job is also detrimental to one's health. University of Michigan sociologist Sarah Burgard, who has extensively studied the relationship between job loss, job insecurity and health, calls this "the waiting-for-the-other-shoe-to-drop problem." Given the current state of the economy, many people are anxiously awaiting the thud of that falling footwear.

In recent months, official Washington has been consumed by two issues: jobs and the economy, and the cost and availability of health care. But there has been surprisingly little discussion regarding the ways in which they intersect. A series of recent studies not only provide evidence these public-policy problems are interrelated: They also suggest that if, as many fear, long-term job security is largely a thing of the past, the public health consequences could be enormous.

Let us start with the latest research on job loss and health, published just last month in the journal Demography. Kate Strully, a sociologist at the University at Albany, State University of New York, found herself struggling with a question often raised by economists (including von Wachter). The correlation between ill health and job loss has long been established, but how can we know which is the cause and which is the effect? Surely some sick people are laid off because they're physically unable to meet the demands of the job. Does this skew the numbers and cause researchers to come to false conclusions?

To find an answer, Strully examined data from the U.S. Panel Study of Income Dynamics, a nationally representative longitudinal study of American families that includes detailed information on the participants' health and employment. The surveys reported not only if the person had lost a job, but under what circumstances.

This allowed Strully to focus her attention on what she calls "no-fault" job losses -- that is, people who became unemployed when their entire workplace shut down. Examples included factory closings and companies that went out of business. In these cases, literally everyone was let go, making it highly unlikely poor health was a factor in any worker's dismissal.

The workers were interviewed approximately a year and a half following the layoffs. Of those who were still unemployed, close to 9 percent reported developing a new stress-related health condition such as diabetes or hypertension since parting ways with their former employer. This compares to a 5 percent rate among people who reported their job condition was stable. Those who found new employment also had above-average rates of new health problems, although not as high as the long-term unemployed.

Given these figures, "I'm convinced that a large shock to one's socioeconomic status, such as job loss, negatively impacts health," she says.

Burgard, who has done her own research along these lines, agrees. "Job instability is OK for some people, but not for others," she says. "If you're an IT guy and you have a high educational degree, part of being successful is jumping from firm to firm. That's how you increase your income.

"But the type of workers we tend to see here in Michigan, who aren't necessarily highly educated, are facing a really tough road. I think people have been focused on the economic payoff (of a more flexible economy where jobs appear and disappear), but are less aware of the potential costs in terms of worker health."

Economists tend to argue that the flexibility to hire and fire workers as needed ultimately makes the economy more productive, and increases overall wealth. If that's actually true, it would have public health benefits. As healthcare economist Jason Shafrin argued in 2007, the concept of "creative destruction" -- that is, a dynamic economy where innovation leads new companies to rise and old ones to adapt or die -- "has decreased average mortality for individuals all over the world due to rising living standards."

In their latest paper, published in the American Economic Review in May, Sullivan and von Wachter present evidence that cuts both ways. They report the association between income and mortality is far stronger than was thought earlier. If the ever-churning economy produces more higher-paying jobs, those able to land one of them likely will see a positive impact on their health.

But the economists also found workers who lose their jobs -- and cannot find another quickly -- tend to suffer large earnings losses and go through a period of income instability. This is a big concern, since "higher variability of earnings is associated with increased mortality."

"You're looking at two people, both with the same long-term earnings," says von Wachter. "The one with the more volatile earnings dies earlier. Certainly, this is interesting evidence."

Like many economists, von Wachter isn't certain that the public perception that jobs and incomes are less stable than they once were is accurate. But he has no doubt that “sweeping restructuring" is going on in a number of industries, and workers in those sectors are experiencing health-sapping stress.”

"This we can say: The large number of people being laid off in this recession will be subject to higher earnings volatility, and that will likely affect their mortality."

This is still more bad news for the former employees of General Motors and Chrysler, but what about workers at, say, Ford? Their company hasn't gone bankrupt, but they're fully aware that the industry is on shaky ground, and there are no guarantees their jobs will exist in a year. Using data from two nationally representative samples -- the Americans' Changing Lives and Midlife in the United States studies -- Burgard and two colleagues looked at people in that precarious situation for a July 2008 Population Studies Center research report.

Their study (to be published later this year in the journal Social Science and Medicine) concluded that

n "among people who are currently employed, those who have been persistently worried about losing their jobs have significantly worse self-rated overall health than those who haven't been consistently worried." Strikingly, these worried workers "are worse off than people who have had a job loss in the past few years, but are currently re-employed."

That makes perfect sense to psychologist Sheldon Cohen of Carnegie Mellon University, one of the nation's leading researchers on the relationship between stress and disease.

"There is a fair amount of evidence that expecting a major stressor is often worse than the actual occurrence of the stressor," he says. "My understanding is people who lose their jobs and get new ones pretty quickly don't show many of these effects. That's consistent with what we know about stress in general. Generally, the longer the stressor lasts, the greater the risk you are under for various diseases."

Cohen reports there are "two general pathways linking stress to disease-related outcomes.

i.) One is the behavioral pathway. We know that under stress, people smoke more, drink more. They don't sleep as well. They don't exercise. They have poorer diets. All of these things can put people at greater risk of disease.



ii.) "The other is the physiological pathway. There is considerable evidence that under chronic stress, the immune system does not work the way it should. There's evidence for underresponsivity, where the immune system does not respond adequately to challenges and also for overresponsivitity."

What's the problem with an overly vigilant immune system? In many cases, the body's response to a perceived threat is what causes the symptoms we associate with a disease.

n "In cold studies, we find people who are under chronic stress, when we expose them to a virus, they're more likely to get sick," Cohen says. "They're producing much more pro-inflammatory cytokine, which is what produces the symptoms of colds."

So expect to hear a lot of sneezing in coming months. But Cohen counters that thought with some good news: The fact job anxiety is so widespread could actually dampen its destructive impact.

"A lot of the experience of stress has to do with challenges to your self-esteem -- that feeling you're not accomplishing what you should be able to accomplish," he says. "Being out of work is a stressful event, irrespective of the reason, but it is buffered a bit by the idea that it's the economy that's at fault -- not the fact I'm incompetent."

Cohen doubts there are any simple public-policy solutions to this particular health facet of the current financial crisis.

n "There are interventions that can influence aspects of stress in people's lives," he says. "But I'm not sure how effective they're going to be for people who are unemployed. The major stressors that put people at risk are the chronic, enduring problems that are engrained in their lives, and they're the ones least susceptible to interventions."

One obvious response is being considered as part of current the health-care debate in Congress: Finding a way to ensure laid-off workers continue to have health insurance. Under the current system, where most people receive health benefits from their employer, laid-off workers are losing coverage precisely at a time when they are at increased risk of disease.

On the other hand, Strully notes, "Making sure people have health insurance won't negate or undo the health consequences of job loss. In my analysis, it doesn't reduce the effect of job loss that much.

"If people are developing health problems as a result of job loss, being able to continue their health care will certainly impact how well they can manage. So it's definitely a good idea (to find a way to make sure the unemployed are covered). But any intervention is going to have to be more broad and holistic."

Meaning what?

n "Some combination of income protection and helping people cope with stress in a reasonably healthy way is probably the most practical intervention," she says. “There's a lot of research showing social support -- access to supportive, healthy relationships — is really important in how people cope with stressful events.”

"I was exchanging e-mails with a union organizer. He was asking me what that kind of organization could do. I suggested a support group that offers really practical advice, like how to maintain a healthy diet on a budget, could be really helpful. Having a group in which people share and develop ties with people who have gone through similar experiences has the potential to be beneficial."

n "All the research suggests the mental health costs are reduced substantially when people return to work," adds Burgard. "You want (as a society) to give people help in finding another job, perhaps retraining, health coverage in the interim. Those are all things our current system doesn't necessarily supply. So from a policy angle, there's a lot we can do.

"Will it be expensive? Probably. Will it be more expensive to pay for medical care when they get sick down the road? That's an open question. We need to think about preventive maintenance. Just telling people to sleep more and buy COBRA won't do it."

Tom Jacobs is a veteran journalist with more than 20 years experience at daily newspapers. He has served as a staff writer for the Los Angeles Daily News and the Santa Barbara News-Press. His work has also appeared in the Los Angeles Times, Chicago Tribune and Ventura County Star.
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