Food sovereignty is fundamental to Sumak Kausay, or good living, an indigenous way of life grounded in the construction of social systems that are based on the reciprocity between humans and nature.
That’s how it’s understood by the principal indigenous and campesino organizations in Ecuador, like the National Confederation of Campesino, Indigenous and Black Organizations, or FENOCIN, which is closely aligned to the national government, and the Confederation of Indigenous Nationalities of Ecuador, or CONAIE. The two, along with smaller organizations, are looking to join forces to get laws approved that guarantee food that is safe, healthy and permanent.
An early victory for the grassroots organizations was getting into the country’s 2008 Constitution articles on the right to food as well as to food sovereignty.
For example, Article 13 of the Ecuadoran Constitution states: “Individuals and communities have the right to safe and permanent access to healthy, sufficient and nutritious food, preferably produced locally and in accordance with their different identities and cultural traditions.” Specifically regarding food sovereignty, Article 281 reads: “Food sovereignty is a strategic objective and an obligation of the State to guarantee that individuals, communities, towns and nationalities achieve permanent self-sufficiency with foods that are healthy and culturally appropriate.”
For those articles to work, the Constitution places the responsibility on the State in designing fiscal, technological, and production policies, as well as those for biosecurity and the provision and use of seeds, among others.
After the new Constitution went into effect, the indigenous and campesino organizations took up a campaign together to seek approval of different laws that ensure food sovereignty. To that end, in early February 2010, about 75 grassroots indigenous and campesino organizations declared that year the Year of National Mobilization for Food Sovereignty.
Of primary concern to the organizations was the lack of consensus in the National Assembly to approve a Food Sovereignty Law, which elaborates on issues like agrarian development, seeds, local farming, and bans on transgenics, and which need to be buttressed by a Water Law, which would regulate access to water on equal terms, prioritizing human consumption and agriculture. These bills were drawn up in the National Assembly in 2009 without consulting the social sectors involved. This sparked an indigenous mobilization in September 2009 and lead to the death of Shuar professor Bosco Wisuma.
One disagreement over the Water Law is about managing the flow of water; the government wants to establish a state agency, disregarding the historic “juntas de agua,” or water boards, in which communities participate. Another point of contention is with the Land Act, which seeks land redistribution and the elimination of the large estates.
The call for the organizations’ campaign denounced the tendency of neoliberal governments to favor agribusiness, monoculture, the prioritization of agricultural production for export (of exotic products such as flowers, strawberries, uvillas, broccoli, etc.), for which entrepreneurs look to take over productive land and water sources. The organizations countered this with an appeal to promote sustainable agroecology, the recovery of traditional practices, and fair trade.
One of the campaign’s strong points was the call to reestablish family and communitarian farming practices, forms that allowed indigenous peoples to survive despite the pressure of the Western world.
“You just have to look at how the last indigenous march was held to know that indigenous communities can feed their people autonomously,” says Gloria Chicaiza, an activist with Acción Ecológica, the country’s leading environmental organization, referring to the mobilization last March in defense of water.
Chicaiza highlighted how in all indigenous protests, each community is responsible for feeding and supporting their own delegations, fully decentralizing the logistical responsibility for the general mobilization.
“A similar practice could ensure food not only for the communities but for the surrounding towns,” Chicaiza said.
Despite the importance of the call to action and the involvement of pro-government organizations —like FENOCIN, the National Federation of Agribusiness Workers and Free Campesinos in Ecuador, or FENACLE, and the National Campesino Coordinating Body Eloy Alfaro, or CNC-EA — neither government officials nor President Rafael Correa accepted the proposals. The bills are held up in the National Assembly.
“Ensuring a system of food sovereignty requires the adoption of laws relating to the administration and regulation of water flows, and the redistribution of land; that is the only way to transform the agriculture and food systems in our country,” said CONAIE President Humberto Cholango.
He added that one of the basic requests of the recent indigenous march was the adoption of the Land Act, but despite talks with the government, no progress has been made because neither it nor the Water Act are priorities for the National Assembly.
“Without solving the problem of land tenure, without eradicating the large estates and redistributing idle land, we cannot guarantee food, let alone food sovereignty,” Cholango told Latinamerica Press, referring to the law’s basic points.
“In talking about land, we also should talk about its spiritual character, the community structures there, and not merely consider it as something to be exploited,” said Cholango, pointing out the difference with how land is seen by the indigenous groups allied with the government.
While the government talks of production and productivity, for which it is seeking to implement agrobusiness and turn communities into units of production, CONAIE claims the land is more than that.
In short, if it is true that the indigenous and campesino organizations have decided to act together on the issue of food sovereignty, there are still differences that divide them. In the meantime, the National Assembly and Correa’s administration are not making inroads to legislate and put into practice the constitutional principles adopted four years ago.
Pirate at Bay
Charting islands of stability in a stormy sea. Advice & articles on going offshore, investing, weak governments, food sovereignty, personal security, and private banking.
Friday, June 15, 2012
Italy seeks extradition of Australian "Mafia" trio
Three Mafia figures living freely in Australia and labelled ''extremely dangerous'' by Italian authorities have been sentenced in absentia to long jail terms for international drug trafficking.
Fairfax can reveal that Australian men Nicola Ciconte, Vincenzo Medici and Michael Calleja have been convicted and sentenced in absentia in Italy for their role in a plot to smuggle up to 500 kilograms of cocaine into Australia.
Australian and Italian police have received intelligence that the cocaine - which has never been recovered - was meant to be smuggled off the port of Melbourne by corrupt workers and taken via truck to a container yard in Sydney, where some of it was to be hidden in a second truck and driven to Adelaide.
Ciconte, 56, formerly of Victoria but now living on the Gold Coast, was sentenced to 25 years jail last month by a Calabrian court for his role in the conspiracy.
The court heard that Ciconte had, along with a small group of Calabrian Mafia bosses, worked as ''promoters, directors, organisers and financiers'' of a plan to import cocaine provided by the Colombian cartels to Australia between 2002 and 2004.
Medici, 47, of Mildura, and Calleja, 53, of Melbourne, were found to have assisted Ciconte in the plot and were each sentenced to 15 years in jail.
Assistant prosecutor Maria Vittoria De Simone told Fairfax that Italy would be pushing the Australian government to extradite the convicted men.
''We will be strongly pursuing the extradition,''
''These individuals have been convicted of heavy sentences in a huge trial and they are extremely dangerous.''
The revelations of the trio's convictions and sentences highlights a common but mostly untold story of global organised crime investigations, in which suspects often escape justice due to jurisdictional hurdles.
During the Italian police inquiry into Ciconte, Medici and Calleja, the Australian Federal Police launched its own drug trafficking inquiry into the trio.
But key evidence from Italian police, including the testimony of an informer, could not be used in Australian courts and the Commonwealth Director of Public Prosecutions advised the AFP against charging the men.
Before the Australian trio were convicted and sentenced in absentia last month, Italian prosecutors had alleged in court that the men had conducted a trial drug run using an empty shipping container before the actual drug run.
The prosecutors alleged that Ciconte ''maintained contact with associates in Vibo Valentia, supplying the materials for the trial containers in collaboration with Medici, Calleja … who made several trips from Australia to Calabria to determine the details of the shipments and the payments''.
''The ultimate goal for Ciconte, Medici, Calleja … [was] to supply the imported cocaine in the Australian market''.
Ciconte's key contact in Italy was Calabrian mafia boss, Vincenzo Barbieri, who is serving an 18-year sentence for his role in the plot.
Between 2002 and 2004, Italian authorities tapped phone calls between Barbieri in Calabria and Ciconte in Victoria and filmed meetings in Italy between Ciconte and his Australian associates and Barbieri and other Mafia figures.
The trio's sentencing in Italy also highlights the ongoing presence in Australia of the Calabrian mafia, known as the 'Ndrangheta, or Honoured Society, which established deep roots in NSW, Victoria and South Australia through migration during the last century.
Ms De Simone told Fairfax: ''We urge the Australian authorities to remember that 'Ndrangheta … represents an enormous risk for countries far from Italy.
''The 'Ndrangheta is the organisation that runs the international cocaine market. It doesn't do its business in Calabria but around the world. It has infiltrated all economic sectors and it controls voting and political candidates at a national and international level. I urge the Australians not to underestimate this organisation. Otherwise it will be too late.''
Ms De Simone said a request to extradite the trio would be made by Italy's Ministry of Justice to the Australian Attorney-General Nicola Roxon.
When asked about the case, the Attorney-General's department told Fairfax it does not comment on extradition matters.
In a separate case also targeting Australian crime figures with links to the Calabrian mafia, NSW drug trafficker Pasquale Barbaro was last month sentenced to life in prison for his role in organising an importation from Italy.
Fairfax can reveal that Australian men Nicola Ciconte, Vincenzo Medici and Michael Calleja have been convicted and sentenced in absentia in Italy for their role in a plot to smuggle up to 500 kilograms of cocaine into Australia.
Australian and Italian police have received intelligence that the cocaine - which has never been recovered - was meant to be smuggled off the port of Melbourne by corrupt workers and taken via truck to a container yard in Sydney, where some of it was to be hidden in a second truck and driven to Adelaide.
Ciconte, 56, formerly of Victoria but now living on the Gold Coast, was sentenced to 25 years jail last month by a Calabrian court for his role in the conspiracy.
The court heard that Ciconte had, along with a small group of Calabrian Mafia bosses, worked as ''promoters, directors, organisers and financiers'' of a plan to import cocaine provided by the Colombian cartels to Australia between 2002 and 2004.
Medici, 47, of Mildura, and Calleja, 53, of Melbourne, were found to have assisted Ciconte in the plot and were each sentenced to 15 years in jail.
Assistant prosecutor Maria Vittoria De Simone told Fairfax that Italy would be pushing the Australian government to extradite the convicted men.
''We will be strongly pursuing the extradition,''
''These individuals have been convicted of heavy sentences in a huge trial and they are extremely dangerous.''
The revelations of the trio's convictions and sentences highlights a common but mostly untold story of global organised crime investigations, in which suspects often escape justice due to jurisdictional hurdles.
During the Italian police inquiry into Ciconte, Medici and Calleja, the Australian Federal Police launched its own drug trafficking inquiry into the trio.
But key evidence from Italian police, including the testimony of an informer, could not be used in Australian courts and the Commonwealth Director of Public Prosecutions advised the AFP against charging the men.
Before the Australian trio were convicted and sentenced in absentia last month, Italian prosecutors had alleged in court that the men had conducted a trial drug run using an empty shipping container before the actual drug run.
The prosecutors alleged that Ciconte ''maintained contact with associates in Vibo Valentia, supplying the materials for the trial containers in collaboration with Medici, Calleja … who made several trips from Australia to Calabria to determine the details of the shipments and the payments''.
''The ultimate goal for Ciconte, Medici, Calleja … [was] to supply the imported cocaine in the Australian market''.
Ciconte's key contact in Italy was Calabrian mafia boss, Vincenzo Barbieri, who is serving an 18-year sentence for his role in the plot.
Between 2002 and 2004, Italian authorities tapped phone calls between Barbieri in Calabria and Ciconte in Victoria and filmed meetings in Italy between Ciconte and his Australian associates and Barbieri and other Mafia figures.
The trio's sentencing in Italy also highlights the ongoing presence in Australia of the Calabrian mafia, known as the 'Ndrangheta, or Honoured Society, which established deep roots in NSW, Victoria and South Australia through migration during the last century.
Ms De Simone told Fairfax: ''We urge the Australian authorities to remember that 'Ndrangheta … represents an enormous risk for countries far from Italy.
''The 'Ndrangheta is the organisation that runs the international cocaine market. It doesn't do its business in Calabria but around the world. It has infiltrated all economic sectors and it controls voting and political candidates at a national and international level. I urge the Australians not to underestimate this organisation. Otherwise it will be too late.''
Ms De Simone said a request to extradite the trio would be made by Italy's Ministry of Justice to the Australian Attorney-General Nicola Roxon.
When asked about the case, the Attorney-General's department told Fairfax it does not comment on extradition matters.
In a separate case also targeting Australian crime figures with links to the Calabrian mafia, NSW drug trafficker Pasquale Barbaro was last month sentenced to life in prison for his role in organising an importation from Italy.
Expatriates find an affordable welcome in Ecuador
Ashley Rogers wanted adventure. She had been a network television producer and writer in Los Angeles for 20 years when she decided it was time to move abroad.
After considering Buenos Aires, Montevideo and Panama City, she settled in May 2011 on Cuenca, a small city of about 330,000 in the highlands of southern Ecuador, drawn to its culture, friendly people and low cost of living.
“The building I ultimately moved into was the first of its kind in Cuenca: an old colonial building being renovated and restored into ultra-modern apartments and lofts, yet keeping the integrity of the historic building,” Ms. Rogers said. “It is the perfect blend of old and new and I couldn’t be happier.”
Ms. Rogers paid $148,000 for the 186-square-meter, or 2,000-square-foot, loft with adobe walls in Casa San Sebastian. The price included reconfiguring the initial architectural plans to match her taste and all the renovations, like the addition of skylights and a mezzanine, surrounded by glass.
“It was an empty shell when I purchased it,” Ms. Rogers said. She worked on the renovations with Juan Heredia, the first developer in Cuenca to take on such restoration projects, capitalizing on the city center’s status as a Unesco World Heritage Site.
Since finishing the brick building that includes Ms. Rogers’ apartment, he has worked on Casa Juan Jaramillo, in the city center, which sold out immediately. His third restoration, at Casa de los Frutales, is being planned.
Ms. Rogers still works on documentary films in various spots around the world but she also has found business opportunities within the Ecuadorean expatriate community. She and Michel Blanchard, a former model and fashion editor, have started Ecuador At Your Service, a travel consultancy and concierge service for anyone interested in visiting or moving to the country. They also are co-hosts of an Internet radio show about Ecuador for the Overseas Radio Network.
Other expatriates, primarily retirees from the United States, also have been drawn to Cuenca since a 2009 magazine article labeled it the “World’s Best Place to Retire.” Today, estimates say there are 1,500 to 1,600 expatriates living permanently in the city, with another 1,000 on long-term visas.
One of them is George Evans, who had been planning to retire in Tucson, Arizona, but was unhappy about the cost of utilities, gas and food. He moved to Cuenca almost three years ago with his wife and two children and opened California Kitchen, a restaurant that quickly became a popular meeting spot for the expatriate community.
“The weather is nice. The cost of living is very low. Public transportation is very good,” said Mr. Evans, who lives in an apartment south of the city center. “I really love to walk and don’t need a car.”
One feature that expatriates regularly cite is the inexpensive, high quality health care provided by the 18 hospitals and medical centers in the city and the large number of English-speaking doctors. Also, as Cuenca is the center of the region’s agricultural and tourism industries, it has supermarkets and malls, English-language bookstores and cultural opportunities.
News articles frequently tout the low cost of living in Cuenca, which one Canadian family of three estimated to be $11,000 a year in 2010.
But no one should expect to find a $40,000 condo. (The U.S. dollar is the official currency of Ecuador.)
Residential buildings range from stone and brick structures that are centuries old to modern condominium and apartment developments in concrete and steel, often covered in brick veneers.
Most condos are priced from $800 to $1,000 per square meter, which equals about 10 square feet, less than half the average cost in Panama City.
Houses tend to be cheaper at $500 to $600 per square meter, with prices declining in rural districts like the Yunguilla Valley.
Most units can be bought for somewhere between $80,000 and $300,000, said David Morrill, who moved here eight years ago from Tallahassee, Florida. He owns Cuenca Real Estate and also runs an expatriate Web site and newsletter.
Mr. Morrill said there are 30 to 40 new condo buildings in development in the city at any given time, and most projects sell out before construction is finished. Prices, he said, have increased around 10 percent per year for the past five years. For example, he said, “I bought a condo six years ago for $60,000 and sold it for $98,000.”
“If you come for the cheapness, you will be disappointed,” Mr. Morrill said, adding, “There’s a lot to enjoy, but it’s not for everybody.” He estimated that of every four expatriates who move to Cuenca, one decides to leave.
But in addition to the real estate demand from expatriates, Cuenca is popular with Ecuadoreans returning to the country after spending years in the United States or Europe. Mr. Morrill estimates that they make up more than 30 percent of the potential buyers’ pool.
“There are 3.5 to 4 million Ecuadoreans living out of the country and almost all want to come back” to retire, he said.
After considering Buenos Aires, Montevideo and Panama City, she settled in May 2011 on Cuenca, a small city of about 330,000 in the highlands of southern Ecuador, drawn to its culture, friendly people and low cost of living.
“The building I ultimately moved into was the first of its kind in Cuenca: an old colonial building being renovated and restored into ultra-modern apartments and lofts, yet keeping the integrity of the historic building,” Ms. Rogers said. “It is the perfect blend of old and new and I couldn’t be happier.”
Ms. Rogers paid $148,000 for the 186-square-meter, or 2,000-square-foot, loft with adobe walls in Casa San Sebastian. The price included reconfiguring the initial architectural plans to match her taste and all the renovations, like the addition of skylights and a mezzanine, surrounded by glass.
“It was an empty shell when I purchased it,” Ms. Rogers said. She worked on the renovations with Juan Heredia, the first developer in Cuenca to take on such restoration projects, capitalizing on the city center’s status as a Unesco World Heritage Site.
Since finishing the brick building that includes Ms. Rogers’ apartment, he has worked on Casa Juan Jaramillo, in the city center, which sold out immediately. His third restoration, at Casa de los Frutales, is being planned.
Ms. Rogers still works on documentary films in various spots around the world but she also has found business opportunities within the Ecuadorean expatriate community. She and Michel Blanchard, a former model and fashion editor, have started Ecuador At Your Service, a travel consultancy and concierge service for anyone interested in visiting or moving to the country. They also are co-hosts of an Internet radio show about Ecuador for the Overseas Radio Network.
Other expatriates, primarily retirees from the United States, also have been drawn to Cuenca since a 2009 magazine article labeled it the “World’s Best Place to Retire.” Today, estimates say there are 1,500 to 1,600 expatriates living permanently in the city, with another 1,000 on long-term visas.
One of them is George Evans, who had been planning to retire in Tucson, Arizona, but was unhappy about the cost of utilities, gas and food. He moved to Cuenca almost three years ago with his wife and two children and opened California Kitchen, a restaurant that quickly became a popular meeting spot for the expatriate community.
“The weather is nice. The cost of living is very low. Public transportation is very good,” said Mr. Evans, who lives in an apartment south of the city center. “I really love to walk and don’t need a car.”
One feature that expatriates regularly cite is the inexpensive, high quality health care provided by the 18 hospitals and medical centers in the city and the large number of English-speaking doctors. Also, as Cuenca is the center of the region’s agricultural and tourism industries, it has supermarkets and malls, English-language bookstores and cultural opportunities.
News articles frequently tout the low cost of living in Cuenca, which one Canadian family of three estimated to be $11,000 a year in 2010.
But no one should expect to find a $40,000 condo. (The U.S. dollar is the official currency of Ecuador.)
Residential buildings range from stone and brick structures that are centuries old to modern condominium and apartment developments in concrete and steel, often covered in brick veneers.
Most condos are priced from $800 to $1,000 per square meter, which equals about 10 square feet, less than half the average cost in Panama City.
Houses tend to be cheaper at $500 to $600 per square meter, with prices declining in rural districts like the Yunguilla Valley.
Most units can be bought for somewhere between $80,000 and $300,000, said David Morrill, who moved here eight years ago from Tallahassee, Florida. He owns Cuenca Real Estate and also runs an expatriate Web site and newsletter.
Mr. Morrill said there are 30 to 40 new condo buildings in development in the city at any given time, and most projects sell out before construction is finished. Prices, he said, have increased around 10 percent per year for the past five years. For example, he said, “I bought a condo six years ago for $60,000 and sold it for $98,000.”
“If you come for the cheapness, you will be disappointed,” Mr. Morrill said, adding, “There’s a lot to enjoy, but it’s not for everybody.” He estimated that of every four expatriates who move to Cuenca, one decides to leave.
But in addition to the real estate demand from expatriates, Cuenca is popular with Ecuadoreans returning to the country after spending years in the United States or Europe. Mr. Morrill estimates that they make up more than 30 percent of the potential buyers’ pool.
“There are 3.5 to 4 million Ecuadoreans living out of the country and almost all want to come back” to retire, he said.
Standard Bank named "Best Expatriate Bank"
Standard Bank has been named ‘Best Expatriate Bank’ for the third time (previously titled ‘best International bank’) and for the second consecutive year also received a highly commended in the ‘Best International Structured Product’ category.
The awards are designed to reward the work of international product providers and finance centres and ‘Best Expatriate Bank’ is awarded to the bank that the judging panel believes offers the best range of current, deposit and savings products available for expatriates.
John Coyle, CEO, Standard Bank Isle of Man, said: “Receiving recognition in these highly prestigious awards is very rewarding for our Offshore group which provides services for expatriates around the world. Our Optimum current account and Quantum Plus products have been designed with expatriates in mind and offer multi-currency banking solutions. To have these products recognised as market leading and for our expatriate service to be highlighted in these awards is excellent news and we are delighted.”
He added: “These accolades are a very credible endorsement of the high standards we strive for within our business and go a long way in assisting us to raise our profile in the core markets in which we operate.”
The International Fund and Product Awards are the only awards that recognise the achievements of the offshore financial services industry and the financial products and services that they distribute through IFAs internationally. The judging panel looked for the following attributes in winners: commitment to target market; appropriateness of product range; use of technology and product innovation; and levels of service and support to distributors.
The awards are designed to reward the work of international product providers and finance centres and ‘Best Expatriate Bank’ is awarded to the bank that the judging panel believes offers the best range of current, deposit and savings products available for expatriates.
John Coyle, CEO, Standard Bank Isle of Man, said: “Receiving recognition in these highly prestigious awards is very rewarding for our Offshore group which provides services for expatriates around the world. Our Optimum current account and Quantum Plus products have been designed with expatriates in mind and offer multi-currency banking solutions. To have these products recognised as market leading and for our expatriate service to be highlighted in these awards is excellent news and we are delighted.”
He added: “These accolades are a very credible endorsement of the high standards we strive for within our business and go a long way in assisting us to raise our profile in the core markets in which we operate.”
The International Fund and Product Awards are the only awards that recognise the achievements of the offshore financial services industry and the financial products and services that they distribute through IFAs internationally. The judging panel looked for the following attributes in winners: commitment to target market; appropriateness of product range; use of technology and product innovation; and levels of service and support to distributors.
Thursday, June 14, 2012
Finding private bankers is far more difficult than clients imagine
Since the financial meltdown of 2008, private bankers have been busy devising schemes to both maximize the fees they earn from wealthy clients, as well as make it more difficult for clients who wake up to discover they’ve been hosed, to fire them.
The new financial products and strategies that private bankers have been sneaking into client portfolios in recent years serve a purpose that has nothing to do with what’s best for clients. It’s all about improving the bottomline of the private banks. Unfortunately transferring wealth from client accounts is the means to the end that private banks are seeking.
Structured notes, hedge funds, hedge fund of funds and other high risk investment products lack transparency and liquidity and are hard-to-value assets. As a seasoned investigator I can assure you, it is impossible for you to evaluate and monitor the risks related to these investments. Don’t even try to.
Even if you were able to get hold of the terms sheets, offering memoranda and other documents related to these investments, good luck understanding the unique features involved in each and every one of these highly complex products. Further, the investment strategies and portfolio composition of hedge funds and hedge fund of funds can be changed at any time.
That domestic equity, long-only, unleveraged fund you invested in today may become global, short and levered to the max tomorrow. With respect to hedge fund of funds, you will not even know who’s managing your money or where your money is being custodied. Caymans? Bermuda? Guatemala? Who knows?
Structured notes, hedge funds and hedge fund of funds are purchased for discretionary clients by private banks because they pay significantly higher fees to the bank.
A private bank may earn 20 to 50 basis points in revenue sharing by steering client portfolios into mutual funds managed by others. (Private banks may deny they receive these revenue sharing payments but, trust me, they do.)
A bank may earn far more – 100 to 150 basis points—from proprietary mutual funds. This is still chump change.
Exponentially greater fees, say 3% to 8% and performance fees of 40%, can be earned by the bank from alternative investments. Given the financial pressure banks are under today, is it any surprise where they’re steering investors? But that doesn’t make it right. These discretionary investment managers are supposed to be guided by what’s best for their clients—held to a fiduciary standard of care. Unfortunately, no regulator is scrutinizing the investment management activities of private banks which are not required to register with the SEC.
Investing client assets in high risk, high fees products that do not perform competitively is a violation of applicable fiduciary duties, in my opinion. Whenever I have examined the performance of these private bank investment products (net of all fees) compared to relevant benchmarks, the perfomance is not just bad—its horrific. T-bill performance for Madoff-size risk.
Since the financial meltdown of 2008, private bankers have been busy devising schemes to both maximize the fees they earn from wealthy clients, as well as make it more difficult for clients who wake up to discover they’ve been hosed, to fire them.
The new financial products and strategies that private bankers have been sneaking into client portfolios in recent years serve a purpose that has nothing to do with what’s best for clients. It’s all about improving the bottomline of the private banks. Unfortunately transferring wealth from client accounts is the means to the end that private banks are seeking.
Structured notes, hedge funds, hedge fund of funds and other high risk investment products lack transparency and liquidity and are hard-to-value assets. As a seasoned investigator I can assure you, it is impossible for you to evaluate and monitor the risks related to these investments. Don’t even try to.
Even if you were able to get hold of the terms sheets, offering memoranda and other documents related to these investments, good luck understanding the unique features involved in each and every one of these highly complex products. Further, the investment strategies and portfolio composition of hedge funds and hedge fund of funds can be changed at any time.
That domestic equity, long-only, unleveraged fund you invested in today may become global, short and levered to the max tomorrow. With respect to hedge fund of funds, you will not even know who’s managing your money or where your money is being custodied. Caymans? Bermuda? Guatemala? Who knows?
Structured notes, hedge funds and hedge fund of funds are purchased for discretionary clients by private banks because they pay significantly higher fees to the bank.
A private bank may earn 20 to 50 basis points in revenue sharing by steering client portfolios into mutual funds managed by others. (Private banks may deny they receive these revenue sharing payments but, trust me, they do.)
A bank may earn far more – 100 to 150 basis points—from proprietary mutual funds. This is still chump change.
Exponentially greater fees, say 3% to 8% and performance fees of 40%, can be earned by the bank from alternative investments. Given the financial pressure banks are under today, is it any surprise where they’re steering investors? But that doesn’t make it right. These discretionary investment managers are supposed to be guided by what’s best for their clients—held to a fiduciary standard of care. Unfortunately, no regulator is scrutinizing the investment management activities of private banks which are not required to register with the SEC.
Investing client assets in high risk, high fees products that do not perform competitively is a violation of applicable fiduciary duties, in my opinion. Whenever I have examined the performance of these private bank investment products (net of all fees) compared to relevant benchmarks, the perfomance is not just bad—its horrific. T-bill performance for Madoff-size risk.
The new financial products and strategies that private bankers have been sneaking into client portfolios in recent years serve a purpose that has nothing to do with what’s best for clients. It’s all about improving the bottomline of the private banks. Unfortunately transferring wealth from client accounts is the means to the end that private banks are seeking.
Structured notes, hedge funds, hedge fund of funds and other high risk investment products lack transparency and liquidity and are hard-to-value assets. As a seasoned investigator I can assure you, it is impossible for you to evaluate and monitor the risks related to these investments. Don’t even try to.
Even if you were able to get hold of the terms sheets, offering memoranda and other documents related to these investments, good luck understanding the unique features involved in each and every one of these highly complex products. Further, the investment strategies and portfolio composition of hedge funds and hedge fund of funds can be changed at any time.
That domestic equity, long-only, unleveraged fund you invested in today may become global, short and levered to the max tomorrow. With respect to hedge fund of funds, you will not even know who’s managing your money or where your money is being custodied. Caymans? Bermuda? Guatemala? Who knows?
Structured notes, hedge funds and hedge fund of funds are purchased for discretionary clients by private banks because they pay significantly higher fees to the bank.
A private bank may earn 20 to 50 basis points in revenue sharing by steering client portfolios into mutual funds managed by others. (Private banks may deny they receive these revenue sharing payments but, trust me, they do.)
A bank may earn far more – 100 to 150 basis points—from proprietary mutual funds. This is still chump change.
Exponentially greater fees, say 3% to 8% and performance fees of 40%, can be earned by the bank from alternative investments. Given the financial pressure banks are under today, is it any surprise where they’re steering investors? But that doesn’t make it right. These discretionary investment managers are supposed to be guided by what’s best for their clients—held to a fiduciary standard of care. Unfortunately, no regulator is scrutinizing the investment management activities of private banks which are not required to register with the SEC.
Investing client assets in high risk, high fees products that do not perform competitively is a violation of applicable fiduciary duties, in my opinion. Whenever I have examined the performance of these private bank investment products (net of all fees) compared to relevant benchmarks, the perfomance is not just bad—its horrific. T-bill performance for Madoff-size risk.
Since the financial meltdown of 2008, private bankers have been busy devising schemes to both maximize the fees they earn from wealthy clients, as well as make it more difficult for clients who wake up to discover they’ve been hosed, to fire them.
The new financial products and strategies that private bankers have been sneaking into client portfolios in recent years serve a purpose that has nothing to do with what’s best for clients. It’s all about improving the bottomline of the private banks. Unfortunately transferring wealth from client accounts is the means to the end that private banks are seeking.
Structured notes, hedge funds, hedge fund of funds and other high risk investment products lack transparency and liquidity and are hard-to-value assets. As a seasoned investigator I can assure you, it is impossible for you to evaluate and monitor the risks related to these investments. Don’t even try to.
Even if you were able to get hold of the terms sheets, offering memoranda and other documents related to these investments, good luck understanding the unique features involved in each and every one of these highly complex products. Further, the investment strategies and portfolio composition of hedge funds and hedge fund of funds can be changed at any time.
That domestic equity, long-only, unleveraged fund you invested in today may become global, short and levered to the max tomorrow. With respect to hedge fund of funds, you will not even know who’s managing your money or where your money is being custodied. Caymans? Bermuda? Guatemala? Who knows?
Structured notes, hedge funds and hedge fund of funds are purchased for discretionary clients by private banks because they pay significantly higher fees to the bank.
A private bank may earn 20 to 50 basis points in revenue sharing by steering client portfolios into mutual funds managed by others. (Private banks may deny they receive these revenue sharing payments but, trust me, they do.)
A bank may earn far more – 100 to 150 basis points—from proprietary mutual funds. This is still chump change.
Exponentially greater fees, say 3% to 8% and performance fees of 40%, can be earned by the bank from alternative investments. Given the financial pressure banks are under today, is it any surprise where they’re steering investors? But that doesn’t make it right. These discretionary investment managers are supposed to be guided by what’s best for their clients—held to a fiduciary standard of care. Unfortunately, no regulator is scrutinizing the investment management activities of private banks which are not required to register with the SEC.
Investing client assets in high risk, high fees products that do not perform competitively is a violation of applicable fiduciary duties, in my opinion. Whenever I have examined the performance of these private bank investment products (net of all fees) compared to relevant benchmarks, the perfomance is not just bad—its horrific. T-bill performance for Madoff-size risk.
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