As the whole financial crisis unfolded last fall and earlier this year, I’m sure you remember the uproar over bonuses paid at some of the very companies that were receiving taxpayer dollars to stay afloat. Companies like AIG and Citigroup , among others.
It became such an issue that prosecutors even got involved, and at the time, I asked New York Attorney General Andrew Cuomo why he needed to know the names of employees who received bonuses and how much they were awarded.
His response was, “Maria, people do not go back into the water until they see the shark is dead.”
I was thinking back to that quote this week as Bernie Madoff was sentenced to 150 years in prison for his role in what is called the biggest financial fraud in history.
People everywhere cheered the sentence, which was the maximum allowed by law. A big reason for that is what Andrew Cuomo was alluding to: To restore trust in the system, you need to see some sort of evidence that the bad guys will get what’s coming to them.
Unfortunately, however, no amount of jail time will make up for the money lost and lives ruined by this scheme. I feel so bad for the victims.
This isn’t completely over, either. I’ve been hearing for some time that more charges are pending related to the scandal, and that now appears to be the case. We also have a similar scandal unfolding with the whole Stanford Financial Group mess. And we all know there are many other instances we never hear about of financial advisors either stealing from or mismanaging the money of their clients.
What can you do? There are no easy answers, but the most critical thing is to get involved and stay involved with your money. Read your quarterly statements. Ask questions if something doesn’t look right – if, say, your returns are suspiciously large or consistent. Have periodic meetings to make sure your advisor is investing with your financial goals in mind (not his or hers) and properly diversifying your holdings.
There are no guarantees, of course, but the onus is on each one of us to avoid becoming a victim. Be involved. As we’ve seen, the consequences can be disastrous.
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