Tuesday, October 13, 2009

Mississippi lags behind other states in protecting investors.

Someone asks you to invest your money in his project. He provides you with a business plan, financial statements, and other documents. Everything so far seems promising, however, you decide to investigate his background to make sure he is not a con artist. A quick check of the SEC and FINRA websites show no disciplinary actions. You then examine the Mississippi Secretary of State's website for violations (the SOS has jurisdiction over securities violations in Mississippi). Unfortunately you the investor, are out of luck as Mississippi does not post violations of its securities laws nor the names of those the state disciplines on its website.

This is not the standard practice as 39 states (see note below) such as Texas, Tennessee, and Alabama protect investors from chastened Stanfords and Madoffs by posting their disciplinary records online. Alabama classifies all "Administrative Orders" by year since 2001. A list of orders for that year is posted as well as the date, action, and the respondent. The website also provides the reader with a copy of the final report (that contains the facts of the case). The other states treat such actions in a similar manner.

Investors suffer from Mississippi's failure to follow the example set by these states, as unethical brokers and dealers' misdeeds are hidden from public scrutiny. While in neighboring states a potential investor can check someone's background online within minutes, in Mississippi he has to file a public records request and wait fourteen business days for an answer, an ironic twist that benefits those convicted of wrongdoing.

Tom Freeland, an Oxford lawyer, said "The whole design of state securities laws is a disclosure model. Getting information to investors is the point of those laws. Obviously, making information available in the broadest possible form is the best way to accomplish that. The Secretary of State should put any public information about disciplinary actions on its website so they will be readily available to investors, journalists, and the public at large."

Mississippi has a duty to do all it can to protect its citizens from scam artists. The current financial meltdown has seen a sharp rise in crooked investment schemes. All too often the shysters never stop trying to trick people out of their money after getting caught. It is usually not professional investors such as Leland Speed that are victims, but average people that have some money but little expertise, thus making them perfect targets for smooth-talking thieves in three-piece suits. The best way not to lose money in investment scams is to avoid them in the first place; a goal best served by posting violations online. Mississippi should enter the 21st century and help its citizens avoid the local Madoffs for whom ignorance is indeed bliss.

Note: Other states that post violations online: Georgia, Kentucky, Missouri, Oklahoma, South Caronlina, North Carolina, Arkansas, Indiana, Ohio, Illinois, New Jersey, Maine, Pennsylvania, New Hampshire, Vermont, Maryland, Massachusetts, Rhode Island, Connecticut, Oregon, Washington, Nevada, Idaho, Arizona, Wisconsin, Wyoming, North Dakota, Minnesota, Utah, California, Colorado, Michigan, Alaska, Florida, Iowa, Kansas,

States that do not post violations: South Dakota, Delaware, Hawaii, Louisiana, Arkansas, New York, West Virginia, Mississippi


Note: Attempts made to contact Mr. Hosemann's office for comment were unsuccessful.

11 comments:

Anonymous said...

Hosemann and all his predecessors have treated the job as a day in the park instead as a job for the citizen's protection. This is also why we have had scan educational institutions where you can buy degrees.

Keep it up, KF. The state will get better.

Kingfish said...

Actually DH has been more aggressive than Clark. Clark was a nice guy but well, didn't do much and didn't understand securities laws nor the role the state could play in enforcing them.

Anonymous said...

Transparency is a dirty word for those holding elected office in this state. Corruption is rampant.

Anonymous said...

Secretary Hosemann has been far more active than you give him credit. He works extremely long days and travels the state constantly in an effort to bring more awareness to everyone in the state in voter issues, consumer protection issues (Scam Jam), more publications, charities rules and regulations and the new securities laws. He recently had section committees meet and updated the charities and securities laws. By January 1, all the new laws will be in effect.

Anonymous said...

Agree with you 4:57 a.m. Delbert is tireless.....don't think the man sleeps.

Anonymous said...

Hoseman is doing a good job but needs to move farther much faster. He inherited the current state of affairs but Kingfish brings up an important issue that requires a resolution sooner rather than later.

Anonymous said...

Anon 4:57, do you know the bill numbers for those charities and securities laws updates, or who authored them? I'd like to read them and the search function on the Legislature's website doen't help much.

Anonymous said...

http://www.sos.state.ms.us/about_sos/SOS%20HappeningsPress0508009b.asp

There you go.

Anonymous said...

Thanks! So much attention was being paid to elections bills at the time, I guess these didn't get the press other items did.

Kingfish said...

What do you expect? Business journalism at the MBJ?

Anonymous said...

I know, silly me ....



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In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

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This is definitely a Beaver production.


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Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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