You
often hear claims of conflict of interest on Wall Street, that the
investment firms’ interests usually take positions opposite their
customers.
It’s normal to hear this from ignorant politicians who have a political axe to sharpen, but it’s disturbing to hear the financial media and pundits sometimes get into the act.
A fact of life: Wall Street firms are obligated to take market positions to do their business. As a result, they must hedge their positions. That means you will often find them on both sides of a position, buying and selling. That doesn’t mean they are contradicting themselves when they sell a customer a security they may have to be selling for themselves as a hedge. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)
It’s normal to hear this from ignorant politicians who have a political axe to sharpen, but it’s disturbing to hear the financial media and pundits sometimes get into the act.
A fact of life: Wall Street firms are obligated to take market positions to do their business. As a result, they must hedge their positions. That means you will often find them on both sides of a position, buying and selling. That doesn’t mean they are contradicting themselves when they sell a customer a security they may have to be selling for themselves as a hedge. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)
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