The "Failure to Supervise" Con:

Well audit time is here again...somewhere...and whether it is the securities business, or virtually any audit of a commercial enterprise, it is important that young employees understand the "failure to supervise" con, or maybe it is a movement or mode of business.... As a young man I worked in a public accounting firm...I well remember the young students that were attending a private two year accounting school that was attended by many young men who had returned from the Vietnam War and were going to school in the morning and working in the accounting practice in the afternoon...no blue bloods here...and many days they were at the clients offices doing their work... Some of these students, who were in introductory classes, were asked to participate in "audits", that were to my view of it, very underbid...in fact, I felt that the fees charged were pretty amusing considering the amount of work that was expected...and yes the students were rushed, and rushed to get the audit done... Whether it is on Wall Street, or Main Street. the strategy of business done at the top of organizations is many times organized so that problems are not found....and senior staff of these corporations just smile... On Wall Street, there are strict rules for senior "principals" who are charged with supervising the actions of brokers...and I remember during the 1980's my boss reviewing my trades with me to understand what the trade was and why it was appropriate for my clients.... Several months ago a major Wall Street firm was fined 5,000,000 for failure to supervise its staff in a whole multitude of initial public offerings...and indeed if one just looks over the press for the past 10 years there is just one fine after another...seems like nobody has learned, or maybe nobody wants to change....or nobody has any intention of changing, and that this is the nature of the game...intentional "Failure to supervise." This is not "Hogan's Heroes" and these are not "Sargent Schultz" who always seemed so funny when he kept saying..."I know NOTHING,,,I see NOTHING"...What every investor needs to know is that this failure to supervise is a critical orange alert matter....and it is important to take action...