Trovena Weblog

Individual Bonds...Not A Good Idea

I've always warned investors about buying individual bonds. Most folks don't understand the that the costs for these transactions are huge and hidden in something called the bid/ask spread. That's the difference between what the bond dealer paid for it and what they'll charge you. (Vice versa if you are selling to them)

Here's a story about how our friends at Morgan Stanley were marking up municipal and corporate bonds between 5 and 25%. Wow! Be smart, use bond funds or professional fiduciary bond advisors to get your bond exposure.

-Christopher

Finra fined Morgan Stanley $90K for unfair trading practices

By Sara Hansard

October 19, 2009

Morgan Stanley has agreed to pay a $90,000 fine to the Financial Industry Regulatory Authority Inc. to settle charges that it traded municipal bonds at unfair prices.

The fine covered 11 corporate-bond trades and three municipal-securities trades made in 2003. Markups or markdowns listed in Finra's complaint ranged from 5.25% to 24.3%. In addition to paying the fine, Morgan Stanley agreed to make restitutions to investors totaling nearly $41,000.

Morgan Stanley agreed to the settlement without admitting or denying the findings. The settlement was reached with Finra in August, but it was not announced by Finra until mid-October.

“We don't comment on regulatory matters,” said Eric Grossman, managing director at Morgan Stanley, when asked about the Finra fine.

Link to Investment News

Profits and Morality

I spend a lot of time in Austin and I love going to the Whole Foods corporate store in the downtown area. If you ever get to Austin, this is worth seeing. Anyway, John Mackey, Whole Foods' founder talks here about why he thinks business is, or can be, a moral thing.

I've never understood why people thought business was "greedy" or immoral in its pursuit of excellence. After all, business success just means that you've successfully solved some human problem. Money is the measure of your success but it isn't necessarily the end in and of itself. Mr. Mackey agrees and I admire his courage for actually speaking about it.

-Christopher

The Whole Foods founder talks about his Journal health-care op-ed that spawned a boycott, how he deals with unions, and why he thinks CEOs are overpaid.

By STEPHEN MOORE

"I honestly don't know why the article became such a lightning rod," says John Mackey, CEO and founder 
of Whole Foods Market Inc., as he tries to explain the firestorm caused by his August op-ed on these pages opposing government-run health care. "I think a lot of people who got angry haven't read what I actually wrote. There was a lot of emotional reaction—fear and anger. I just wanted to get people to think about whether there was a better way to reform the system." 

Read the full WSJ article "The Conscience of a Capitalist" »