“I don’t know what all these banks did to deserve all this but once again, when you are fining the bank, you are fining the shareholders of the bank who had nothing to with what management did. So if management did something egregious or criminal go after the people that did it and stop taking the shareholder’s wealth.”
– Howard Ward GAMCO CIO
Since I started this column, I have on occasion used this platform to poke holes in the weak analysis, bad theory and just plain dumb ideas that bounce around Wall Street all too regularly. Today, I want to highlight a surprisingly common belief that simply fails to withstand close scrutiny. Indeed, it is so rife with the sort of sloppy, ill considered thinking that it cried out for a response.
The quote above is fairly typical of the genre. Not to pick on Howard Ward or anyone else but there is this entire school of thought that treats shareholders as passive victims of reckless prosecutors. There have been some truly awful spin made in response to the recent criminal prosecutions of large banks, but this one takes the cake.