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Monday, October 13, 2008
Tyco Ex-CEO Kozlowski Writes to FOX Business
FOXBusiness
Transcription of letter FOX Business Network received from former Tyco CEO Dennis Kozlowski:
October 02, 2008
Dear Eric,
As I sit in a N.Y. State prison I am shocked at the financial destruction going on in our society. It’s sad and distressing that institutions that have stood the tests of time for well over a century can have such an ignominious end. In my opinion there are a number of reasons we are in such a mess:
We have been banbozzled (sp) by wall street. Those who know better led others into believing that there are shortcuts to makings (sp) mountains of money overnight -- as we’re seeing now, this is not only impossible, but it also destroys what was built over lifetimes. At one time I thought the wall st. types to be so much cleverer than those of us who spent many years building a company. At times they seemed to make more money in one year than we made in many. Then we find little of it was real -- it was a big act that destroyed jobs and lives.
On “Main Street” many had an urge to live in bigger, nicer houses. Financial institutions were happy to satisfy that urge with easy credit. Many upgraded to homes they simply could not afford over time. When the housing market finally turned -- it always does -- the home became an unaffordable burden rather than a dream.
Regulators imposed mark-to-market accounting back in the 90’s. Assets on the books of a company are to be valued at their fair market. Sounds simple, but it does not work when there is value but there exist (sp) no market. The resulting write downs of the assets only exacerbates the problem.
There’s plenty of blame. Motives varied. Some wanted to make a fortune quickly, some wanted their wow house they could not afford, some wanted to please their constituency at any cost and be reflected and some wanted the economy to grow.
Now we must pay the price. I hope I don’t sound holier than thou. At one time I enjoyed the good things in life as much as anyone else. But the way it was done since I left business in 2002 is honestly frightening to me.
Momentous events are now happening in America. We have bought into socialism like it or not. The argument now is; how much of what we’ve known all our lives will change and what the new order is likely to look like.
Good Spirits,
Dennis
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FOX Translator
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It's time to let you in on a dirty little secret: You may not own the stock you own. That's right, if you invest with a brokerage firm, the shares you bought are almost certainly not held in your name. Technically, they're held in the name of the Wall Street firm you do business with, hence the term "street name."
No, you haven't been robbed. Ultimately, the decision to hold shares on the books under a different name doesn't affect the economic ramifications for you. You¿re listed as the "beneficial owner," even though the firm is the official owner of the shares. But, you are giving up some rights, and investors concerned about good corporate governance might want to get that stock back in their own names.
Here's the problem: If your stock is technically owned by, say, Merrill Lynch, then Merrill Lynch gets to do things with it that might work against your wishes. Take short selling. Investors who want to sell shares short need to first borrow those shares. The lenders are often the big Wall Street firms that are handing out Street-name shares. So, if you feel that a company you own is a victim of aggressive short selling, chances are your own shares are being used to fuel the shorting.
Also, your brokerage firm can cast ballots on some corporate matters affecting a company without getting your input. Technically, this can only happen in votes considered ¿routine¿ by securities regulators. But, there's a big catch: some big events, like board elections, are considered "routine" under law.
The good news is that you can easily fix the Street name problem: Just request that your brokerage firm makes you the listed owner of the shares. If they refuse, find a new firm.
