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An intelligent internet fraud was uncovered by SEC on Friday. A pair of British brothers marketed Marl, a fictitious “stock-picking robot,” and earned $1.2 million from 75,000 investors buying newsletters and home “robot software” used to access Marl’s stock picks. Since “Marl” did not really perform analyses, the Hunters were earning at least $1.87 million from stock promoters. What makes this incident more interesting is that the brothers are now 21 years old only, and they started the alleged scheme in 2007, which means they were just 16 years old. The brothers made creative claims on their websites. According to the complaints received by SEC, the website pronounced that Marl could pick out distinct trading patters “in split second timing” and could process 1,986,832 mathematical calculations per second. Therefore, trading according Marl’s picks could earn investors 34% a week. In fact, Marl’s picks did skyrocket in price once the newsletters were out. Since Marl pi...

State and local governments in the United States have a major fiscal disaster on their hands.  The obligations of these governments embodied in their pension plans for government employees are not funded and there are no serious plans to fund them.  The result: a combination of looming state bankruptcies and drastically reduced pension benefits for covered employees.  The biggest single group of pensioners threatened by this looming disaster are public school teachers. Yesterday, Democratic Governor Pat Quinn of Illinois made a last ditch desperate effort to avoid disaster in Illinois by urging state employees to "voluntarily" accept a shift in the retirement age to 67 and to contribute an additional three percent of salary to their pension funds.  This is not a reform, this is an emergency and Quinn is a Democrat elected with strong union support in a traditionally Democratic state.  Even if Quinn's suggestion is taken up by public employees, which it won't be,...

Some regions and sectors of the US economy are moving right along.  In the aggregate, though, the economy may be slowing and slipping back into recession.  It is not just housing. The current prosperity has limits.  Economic expansion depends upon aggressive entrepreneurial activity and, except in technology, we're not seeing much on the entrepreneurial front.  Why? Some roadblocks to prosperity are "hard" obstacles and some are "soft" obstacles.  The "hard" obstacles are excessive government regulation, the government-imposed cost of labor, and sharply rising energy costs.  Most of these "hard" obstacles are self-imposed problems for the US economy.  We have put these restrictions on our economy and they are now a serious impediment to an economic recovery. The "soft" obstacles are the almost daily attacks by the White House and its supporters on the business community.  These attacks have created a gloomy background that clouds an...

A conundrum is something that is surprising and unusual and difficult to explain. Sometimes a conundrum is described as a "riddle." Today's conundrum, according to the media, is the "jobless recovery." Really? Is it truly difficult to find the reasons why employers have scant interest in adding to their work force? The only folks that find that this is a "conundrum" are folks that are not employers. American employers know perfectly well why hiring new employees is of little interest and could pose a major threat to their company's financial security. The future of the US is to use labor from outside the country. Why? Is it because wages are low? If that were the case the US would have always "imported" it's labor through outsourcing. Why is "outsourcing" a modern phenomenon? Is this really a conundrum, as the media is fond of asserting? Or, is it simply the logical and predictable outcome of the dramatically incr...

General Catalyst: Introduction to Venture Capital Date: Thursday, April 19th, 2012 Time: 12:30 pm - 1:45 pm Location: Tisch 200 Join the Finance Society this week as we welcome Managing Director Jonathan Teo from General Catalyst Partners. General Catalyst is a private equity/venture capital firm based in Cambridge, MA. They specialize in venture capital and growth equity investments in Clean Energy, Consumer & New Media/Internet, and Software/System Services. Jonathan Teo, head of their New York office, will come in to introduce what venture capital is, speak about the work he does, and discuss some of General Catalyst's investment strategies. Read more about the firm at www.generalcatalyst.com , and be sure to join us for this exciting event! Bloomberg Assessment Test Date: Friday, April 20th, 2012 Time: 12:00 pm - 3:00 pm Location: Tisch 200 Join Finance Society and Bloomberg Institute this Friday and take the Bloomberg Assessment Test (BAT). The BAT is a st...

Americans are generous people. They believe in helping others. The Americans for Disability Act, passed by overwhelming bi-partisan Republican and Democratic support, championed both by then Senate Majority Leader Robert Dole and then President Bill Clinton, must have seemed like a good idea at the time. Why not help people with disabilities? Isn't that the right thing to do? Most Americans would answer the above question in the affirmative. Why not? But, the reality is the ADA, as the act is known, has a definition of disability that the vast majority of Americans would never agree with. For just one example, chronic alcoholism is a "disabililty" under the ADA. If an employer refuses to hire someone because they are obviously inebriated in the interview and they confess to a severe drinking problem during the job interview, then that employer can be prosecuted under the ADA. Is that what a bi-partisan group of Democrats and Republicans thought they were singing u...

Four days ago, the New Orleans Hornets were bought by Tom Benson, the owner of the NFL New Orleans Saints, for a deal valued at a reported $338 million. The troubled basketball team has been in administration by the NBA for over a year now due to an unsustainable business model, and so this new deal seems to be bringing some new life back into a team that saw its star player, Chris Paul, leave for the L.A Clippers earlier this season. The problem now becomes what Benson can due as owner to leverage his team back into playoff contention like last year, when the Hornets almost bested the Lakers. The financials do not bode well for Benson. Benson paid a 19% premium for a team that has run three years of consecutive losses. In addition, his current fortune, estimated at about $1.1 billion according to USA Today puts his investment into the Hornets at about 25% of net worth; even if he was able to finance a large portion of the deal with debt, a question remains whether Benson can shore u...