FAKE FINANCIAL NEWS
Separate fact from fiction to reveal the traps set by bogus online daters and fake financial marketers
By Vonetta Logan
I
magine that you’re using a dating app and swipe right on a comely lass or rugged fella. You “match” and then the witty banter ensues. A few flirty emojis, some well-placed innuendos, and your heart starts beating fast. Your mind races to the possibilities, and you innocently ask for more information: When can we meet? Do you have any more pics? Is that REALLY you with Sting? Then the wheels start to come off. Your dream date is nothing more than a catfish, a person using someone else’s identity to lure people into an amorous trap. Your Instagram-ready bikini beauty is really a bored Nebraska housewife, or your rugged beau with the intricate tattoos and sweet chopper is really a 12-year-old kid and you’re now looking at a jail sentence. Misrepresentation is common in the tech-based dating scene, but it’s also common in the financial news sector. Retail investors are getting financially catfished every day. Here’s an accounting of some of the worst.
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Who could forget the seemingly unanimous decision by broker-dealers to reduce commission rates on stock and exchangetraded fund (ETF) trades to zero? The move was hailed as “gamechanging” and “revolutionary” but left many wondering how firms could do it. There’s no such thing as a free lunch, right? “Commissions have ratcheted down in fits and starts for years,” according to a recent Bankrate article, “but for some brokers, commissions are not the largest part of their business. While they’d prefer not to cut commissions, they have other ways to make up the revenue.” Charles Schwab, which recently announced its intent to acquire competitor TD Ameritrade, saw revenue generated from trading fall from 15% in 2014 to just 8% in 2018. Most of Schwab’s revenue comes from income on client funds and from asset management. They probably derive revenue from selling clubbed baby seals, but we can neither confirm nor deny that. So what does “zero commissions” really mean for retail investors? Catfish revealed: Firms have reduced commissions on stocks and ETFs to zero but are still charging for options trades. Many brokers are still using legacy technology platforms that are as bloated and slow as you feel after an all-you-caneat buffet. Most brokers have a wide array of “asset management” services. They want to manage you out of your assets. They’re selling your information so they can upsell you later. Only 54% of Americans own stocks. Most new investors are reluctant to jump into stocks because equities are at an all-time high and the capital commitment is huge.
ILLUSTRATION BY LUCKBOX STAFF, SHUTTERSTOCK IMAGES
Catfish Are Biting in Love and in Money
LESS THAN ZERO
12/20/19 2:20 PM
