Wall Street Versus America

January 30, 2006
Never mind Enron—corruption, fraud and towering incompetence are Wall Street's daily bread and butter, insists this lively j'accuse
. Ex-BusinessWeek
reporter Weiss (Born to Steal: When the Mafia Hit Wall Street
) details the myriad ways the financial industry preys on small investors. Scraping the bottom are the boiler-room operators who peddle worthless microcap stocks over the phone and the "paid research" outfits hired by companies to tout their stocks under the guise of independent analysis. But the author finds plenty of chicanery at the pinnacle of Wall Street probity, blue-chip mutual funds, which, he contends, charge exorbitant fees and pay kickbacks to brokers to steer customers their way—while yielding a markedly worse return than market indexes. He also pillories the industry's toothless watchdogs—the New York Stock Exchange, a business media addicted to hype and puffery, and a do-nothing Securities and Exchange Commission. (Weiss's savaging of oft-lionized ex-SEC chairman Arthur Levitt is particularly vicious and funny.) The author sometimes meanders, and his cures for the rot—empowered short-selling and investor grousing on the Internet—seem pretty feeble. But Weiss's wise-guy attitude and muckraking chops make for a devastating broadside.