Aug 17

lies

It felt so good to unload two weeks ago on Charles Schwab for lying about the safety and liquidity of auction-rate securities they sold me. Blogging as catharsis is underrated, especially if you have as much tied up as I do in these now illiquid ARSs. As I pointed out in my previous post, just about every other firm else has settled, but not Schwab. No, they blame everyone else — the underwriters, the customers and, now, even the New York attorney general.

Today, the big news is that the New York State Attorney General is making good on the threat to file suit. This welcome but not-unexpected turn of events gives me not only another chance to vent against Schwab, but also for the first time to document that I wasn’t the only customer they lied to.

Today, the Wall Street Journal has published excerpts of what the lies the brokers told customers. Check out some of what they told people:

Customer from Massapequa, N.Y. Customer: “You know, I’m not trying to make a ton of money. I just want to play it safe.”
Broker: “Understood.” …
Broker: “When you go to get out of this, even though you tell the rep sell it that means you want to stop the auction. The hardest part of this auction is getting into it. That is the tough part. Getting out of it is easy as just selling.”

Customer from Seaford, N.Y. Customer: “I can just get out every 7 days?”
Broker: “That’s right.”
Customer: “I can just give you 7 days and don’t renew and you put the money back in my account?”
Broker: “That’s correct.”

Customer from Remsenburg, N.Y. Customer: “It is some kind of short term muni-based piece of paper used as an alternative to [a] money market.”.
Customer: “So that is better than what I am getting?”
Broker: “Yeah, yeah. It is better than saving in the money market at the moment.”
Broker: “You pick up about 50 to 60 basis points over what you would get in a money market, and what you are giving up is next day liquidity.
Customer: “OK. I can adjust it by $100k amounts every week?”
Broker: “In terms of if you wanna get out?”
Customer: “Yeah.”
Broker: “Yeah.”
Customer: “I’ll know a week ahead of time if I wanna make a big investment.”

Customer from New Hyde Park, N.Y.
Broker: “And it’ll roll over monthly unless you call me and say, ‘Hey [Broker], don’t roll it over anymore.’”
Customer: “Oh, I see. OK.”
Broker: “And then next month I’ll stop the auction and all the cash will come back to your account.”
Customer: “OK, [Broker], thank you.”

Customer — location unidentified Customer: “Well I need the liquidity because I may buy a house soon.
Broker: “I see.”
Customer: “I sold my house and this is money that’s just there temporarily.”
Broker: “instead of looking for the highest yield, I would personally look at the highest security. And that would be my second thing. And probably periodic auction rate securities. That would work better than any bond mutual funds for you. That’s my humble opinion.”
Customer: “OK. And it would be safer?”
Broker: “It would be much, much safer, for sure.”

Assurances like these are what lead me to invest money. Schwab brokers delivered these same lies to me.

What’s Schwab’s response to this news? Well, they issued a press release this morning, saying, in essence, “Not our fault…not our problem…all those customers we talked to about safety and liquidity can schove it. We ain’t schettleing.”

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Jul 29

pound of flesh

The short version of a long story is that Charles Schwab sold me auction-rate securities, promising liquidity, then stonewalled me when the market disappeared for the ARSs. Meanwhile, every other firm on the planet — and I mean every one – made their clients whole. Goldman Sachs, the auction agent for the ARSs I bought: settled. Fidelity: settled. BofA: settled. TD Ameritrade (late of zero-doc mortgage loan fame): settled.

You can only imagine the lengths I’ve gone to to try to bring this to the attention of regulators. I’ve spoken to regulators in Massachusetts (the issuer of the ARS I bought, the proceeds of which were used to finance the Big Dig), Illinois, and last summer, New York.

I’ve written letters…called representatives…filed complaints with FINRA (famous for being the securities industry’s favorite regulator and the former home of the new SEC chairman. Buy lots of empty mattresses as long as these people are protecting you).

I clearly remember the conversation I had with the NY AG’s office last year. They “got it” but when nothing happened for months, I assumed that office, like all the others I had implored, had moved on to more newsworthy pursuits. Like compensation at AIG and why Lehman Brothers’ collapse was good for the candle-making industry.

Then, finally — finally! – last week, the New York State Attorney General — from among all the attorneys general in the country who were beating their chests about protecting investors last year — sent Charles Schwab a demand letter (attached below).

Charles Schlemeil had convinced themselves they hadn’t lied…they hadn’t stolen my money…that it was those nasty Wall Street firms who were at fault when the ARS auctions tanked. “We’re not the bad guys,” they claimed. “We just sold these things ‘downstream.’ We don’t have anything at all to apologize for or make good on.” Schwab stood on principle! It was a victim, too!

Principle, shminsciple. Now that the NY AG is onto them, they’re talking about how much it’ll cost them to hold off the litigation and whether or not that’s a better deal for them than paying up. This was always a calculation of cost and until now it simply cost those bozos-in-$900-suits less to stonewall than to pay up. When nobody appeared to care, it was easy to argue principle.

Yes, I’m upset that I can’t get to my money…that Schwab lied to me…that talking to Chuck turned out to be talking to a wall. That Schwab is full of schit when it comes to doing the right thing — what everyone else did — for their clients.  But mostly, I was unhappy that in the face of such obvious avarice and fraud, none of the responsible regulators did anything about it. One nastygram like this was all I was looking for…and now that my home state AG has sent it, it’s only a matter of time until Charles Schwab capitulates.

But until then, I am anticipating the pound of flesh the NY AG will extract from Schwab and grateful to my fellow Noo Yawkers for stickin’ with it for us little guys.

icon for podpress  NY AG ARS demand letter to Charles Schwab: Download (197)
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Jul 22

Remember the original Spinal Tap movie in which the amplifiers go to 11? Voila! Instant meme.

turn the volume up to 11

Well, I’ve just read a blog post from zug.com called “The Verizon Prank” in which John Hargrave risks big dogs and angry neighbors to make a point I wish more people were concerned about: lax privacy controls. Maybe we have the beginning of a new meme: Hargrave standing outside Verizon’s CEO’s home with the amp on 11 yelling, “Can you hear me NOW??

My kids often ask why I object to signing pin pads at checkout lines. Simple, I tell them. Would you like to have your signature digitized and placed on orders for everything from stocks to cellphones? Wouldn’t care for that, they say.

But that fuzzy “privacy stuff” is protected, they protest. We live in public on Facebook and Twitter (and I don’t?)…we don’t worry about privacy.

The upbrading from my kids helps the confused cashier who thinks I am a nut and who can’t restart the transaction…yes, the pimply dude will say, your kid is right. Trust [TJMaxx, Wal-Mart, Exxon, Sears, L.L. Bean, the corner spa, the library] to protect your information. Like your lovely daughter there (lascivious glances at my tender young kids!), I trust [Gulf Oil, Toyota, AT&T, Verizon, T-Mobile, Charles Schwab, the IRS] with anything they want to store about me.

Not me. I remain very skeptical. And, after you finish laughing your ass off at this video, you should become more skeptical, too.

Jul 19

orwell

On the off-chance you haven’t heard about amazon.com erasing Orwell novels from Kindle users’ devices, here’s the coverage from nytimes.com.

You really have to congratulate amazon.com for creating new levels of nested metaphor. My Room 101 isn’t rats: it’s DRM.

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Jul 15

I often use my blog to diss marketing that’s stupid, misleading, dangerous or derivative.  This time it’s my pleasure to share marketing that’s on it…at the top-dead-center of the power stroke…so damn good it’ll make your day.

Coffee lovers often talk about the “blend” — a mystical combination of the beans, the roasting and the infusion of hot water that delivers whatever it is coffee addicts see in their poison. (I just see mud.)

In high tech marketing, the “blend” is everything. You gotta have creativity… you gotta have authenticity…and given that small tech startups are either a) a completely new idea and/or b) trying to unseat titans, you gotta have balls to make your point. Big ones.

And my friends at currensee.com have ‘em. Watch this video. In just 1:02, you get it all in the blend. The beans (what currensee.com is), the roasting (it’s a social network for currency traders) and the infusion of…well…tush into the blend. If you don’t smile — and then head right over to the site — it’s definitely your problem.

My hat’s off to Dave and Michelle for ignoring all the reasons marketers come up with not to stand out and delivering their message (make more money trading money with a group) with a liberal dose of authenticity and humor.

Now…don’t spend too long replaying the end of this video, even if nobody’s watching you.

Jul 13

Lunch with a former colleague I hadn’t seen in 7 years. People change a lot/don’t change at all.

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Jul 01

allcloggedup

This is going to be a short and badly written blog post. It’s devoid of content. It has no theme. It really won’t make that much sense.

I’m trying to expunge a serious case of writer’s block by — what else — writing about it. And I’ve been cursed at the worst possible moment.

I need to write several press releases and can’t. I need to edit collateral. I can’t. I want to update several web pages. I’d better not. I composed a PowerPoint for an analyst this morning. It stinks.

A colleague I was talking with said I needed a “rest.” I’m not sure if she means I’m over the hill or tired. No matter. I’m not fit to write about it.

But at least I know what caused this blockage (if not how long it’ll last). I was searching for images today and came across the most revolting blog post of all time. If this doesn’t “stop you up” then nothing will.

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Jun 26

no_stupid_people

This is post is for all my colleagues in the marketing biz. I want to tell you that we collectively destroyed email.

What did we do that was truly stupid?

Simple: we have so overdone email that now it’s useless for all of us. Have you noticed that no matter what you do — text or HTML, links at the top or bottom, a great discount offer or the promise of everlasting life — your response rates have gone down? Have you noticed that no matter what “marketing automation” system you track email with that since 2005 your response rates have declined from whole percentage points to basis points today? (A basis point is 1/100th of a percentage point. They’re used to track minute changes in bond rates.)

Marketing programs that decline this precipitously this quickly do so only because we have completely overwhelmed consumers and they can’t take it any more. They’re the ultimate marketing failure: one hand clapping in an empty auditorium.

We don’t seem to remember how resistant we all were at first. We didn’t believe you could sell lumps of coal via email blasts. “Our audience doesn’t have email…and won’t ever get email.” Remember that? But, of course, that 55-year-old CFO and that aircraft mechanic and that Mom at home with stinky diapers all got email. So, what did we do?

First, those of us in big companies spent too much on email (because you can’t help yourself and you were afraid of missing the boat), driving CPMs out of reach. Next, we “institutionalized” email…added people whose only job is to generate email blasts. We linked it to our CRM systems…we became “email experts.”

Because we’d spent real money on people and systems, we needed to measure what we were doing. So, of course, we needed “infrastructure” like Eloqua, Vertical Response and Constant Contact to manage it all. And the (physical) direct mail industry needed a place to go because we had previously crapped up direct mail, so guess where they went…with all their “direct marketing science” and purportedly effective techniques.

Having built a hugely expensive house of cards around email, we forgot one thing: anyone can send email because the Internet made it essentially free. While we were adding cost to email and being profligate to boot, the spammers discovered that basis points of response can impact US dollar flows into Nigeria. We encouraged the spammers, actually gave them the idea, while they laughed at us for “systematizing” it and making it a “core marketing practice.” Any fool can write a good email and find 10K people to send it to. Between us and the spammers, there’s not an iota of tolerance left in anyone for more email pitches.

Worse, the customer service people decided email — along with out-sourcing call centers to India — would be the ideal way to reduce costs (and, incidentally, ensure that artificial measurements of responsiveness replace actually talking to customers).

Now, we have all the people, tools and expense…and it’s all worthless. Pay-per-click and search-engine-optimization are now nearly ruined as marketing programs as well. (Is anyone paying less per conversion?) And that same weak, lemming-herding instinct is all over social media (which already has enough corporate Twitter feeds to tempt a new generation of spammers).

Creativity still counts. Someone will think of something clever soon…and then have to stand back and watch the masses of marketing experts foul it up as well.

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Jun 16

Do you crunch? Or fold?

After over three years of blogging, I am officially nonplussed.

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Jun 06

OK, I don’t know what DC Shoes are…and whoever these people are, they certainly didn’t create this video to try to get me to buy their stuff. I am just not their target market.

But I gotta say, this video has four minutes of the most spectacular drifting I have ever seen. “Oooo!,” you’ll say when you see Ken Block smash the fluorescent lights. “Whoa!,” you’ll shout when he slams the driver’s rear wheel into the water balloon in the hand of a dummy (which is seated comfortably in a folding chair). And you’ll be outta your seat when your see Block slam out of a doorway and drift clockwise to within inches of the edge of a dock.

(But what’s up with the paint-ball stuff? Does the shooter celebrate because he hit the car or because he just lives to shoot again?)

This might not rise to the level of an Internet meme, but it’s pretty close.

(Oh, and you can skip the last few minutes…unless, of course, you wanna see the clothes.)

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