January 30, 2025
I can expand on these points, providing real cases and true incidents I experienced as an industry insider.
1. Lack of Fiduciary Duty & Conflicts of Interest
(i) HB&B operates as both a fiduciary and an agent under the same brand, creating an inherent conflict of interest.
(ii) Financial advisors are being licensed as salespeople, compensated by commissions and incentives rather than acting solely in clients’ best interests.
(iii) The industry phrase “You get to eat what you kill” reflects this sales-driven culture, prioritizing profit over fiduciary responsibility.
2. High Fees, Hidden Charges & Costly Technology
(i) Clients are burdened with excessive management fees, transaction costs, and hidden charges that erode investment returns.
(ii) Firms invest billions in high-speed trading technology to front-run public trades, ensuring they maintain an informational and timing advantage.
(iii) Proximity-based computing allows HB&B to execute trades milliseconds before the public, leading to a systematic wealth transfer from retail investors.
3. Manipulative Trading & Market Rigging
(i) Front-Running Fed Operations: HB&B firms have privileged access to Federal Reserve policy changes, allowing them to trade ahead of the market.
(ii) Delayed Trade Reporting: Public trade executions are reported 15-20 minutes late, disadvantaging retail investors while institutions trade on real-time data.
(iii) Opaque Algorithmic Trading: Proprietary trading algorithms systematically trade against public investors without disclosing methods or risks.
(iv) Misleading Earnings Reports: Quarterly earnings reports are manipulated to project false growth narratives and influence stock prices.
4. Insider Trading & Exploitation of Client Data
(i) HB&B firms collect vast amounts of client financial data under the guise of “Know Your Client” (KYC) regulations but use this information to trade against their own customers.
(ii) Staff monitors the best and worst-performing client accounts and exploits this knowledge for personal gains through buying or short-selling activities.
(iii) When supply-demand imbalances occur, HB&B firms use insider knowledge to trade advantageously while withholding this critical information from clients.
5. Preferential Access to Investment Opportunities
(i) Exclusive Private Placements: The best public offerings and private equity deals are restricted to wealthy insiders and “sophisticated” investors, preventing retail investors from participating.
(ii) Preferential IPO Treatment: “Hot” initial public offerings (IPOs) are allocated to preferred clients, leaving ordinary investors with lower-quality opportunities.
6. Aggressive Sales Tactics & Biased Financial Advice
(i) Agents are often misrepresented as financial advisors when they are primarily licensed salespeople.
(ii) High-pressure sales tactics push clients into proprietary products that benefit the firm, even when these investments are suboptimal for investors.
(iii) Portfolio recommendations—such as the standard 60:40 equity/bond allocation—persist even when market conditions suggest alternative strategies.
7. Regulatory Capture & Legal Manipulation
(i) Regulatory Lobbying: HB&B firms lobby to shape securities regulations in their favor, ensuring rules benefit institutions over retail investors.
(ii) Regulatory Manipulation: Industry executives rotate into regulatory positions temporarily, ensuring weak enforcement and pro-HB&B policies.
(iii) Legal Evasion: When caught in wrongdoing, firms negotiate settlements without admitting guilt, paying fines with shareholder funds rather than holding executives accountable.
8. Market Distortion Through Share Buybacks
(i) Share buyback programs are often used to artificially inflate stock prices at cycle peaks.
(ii) Management bonuses are tied to these stock price increases, incentivizing buybacks even when they weaken the company’s financial health.
(iii) Retail investors are misled into purchasing at peak prices while insiders cash out at the top.
9. Exploitative & Misleading Investment Research
(i) Conflicted Analysts: Sell-side research analysts provide biased recommendations that align with their firm’s proprietary trading, investment banking, and retail sales department interests.
(ii) Lack of Risk Disclosure: HB&B firms downplay risks while aggressively promoting high-fee investment products.
(iii) Inadequate and Misleading Client Education: Investors are encouraged to take on debt while given incomplete or misleading information about risk.
10. Unethical Tax Practices & Lack of Accountability
(i) HB&B firms employ tax avoidance strategies that border on tax evasion, allowing executives and wealthy clients to sidestep obligations.
(ii) When prosecuted for tax evasion misconduct, penalties are paid using corporate funds, meaning shareholders—not the responsible executives—bear the cost.
(iii) Executives rarely face jail time, reinforcing a culture of impunity within financial institutions.
Bottom Line
Will HB&B address these issues and adopt a more transparent, fair, and accountable financial system? Based on my 45 years as a Wall Street insider, the answer is no. These institutions are driven by profit, not ethics, and have no incentive to reform unless public pressure and regulatory oversight force their hand.