By Pam Martens: March 26, 2013

The only entity less deserving of an Investor Relations award is the magazine that just gave one to JPMorgan’s Chairman and CEO, Jamie Dimon, last Thursday evening.

Six days before the awards event hosted by IR Magazine (that stands for Investor Relations Magazine but could also stand for Insane Rationale Magazine) which went unattended by Dimon (likely out of fear he might trip over the people rolling on the floor at his award) the U.S. Senate Permanent Subcommittee on Investigations released a 307 page report and 98 exhibits proving beyond a shadow of a doubt that Dimon and his CFO at the time, Douglas Braunstein, either lied through their teeth to investors and investment analysts or were in the dark about what was going on within their own company when the Chief Investment Office churned $6.2 billion of bank deposits into pocket change.

At the related Senate hearing on March 15, Chairman Carl Levin summed up investor relations at JPMorgan as follows: “piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight, and misinformed the public.”

Despite this assessment from the U.S. Senate, the unnamed researchers at IR Magazine, under the Wedgewood dome of Cipriani Wall Street, where the event was held on March 21, gave Dimon the award for Best Investment Relations by a CEO or Chairman of a Large Cap company and gave the firm (try to hold it together) an award for “Best Crisis Management.”

All the Cipriani Bellinis and Chocolate soufflé with Chantilly cream in Manhattan will not wash away the bitter taste from these awards. And the worst part is – they’re part of a pattern on Wall Street. But first, let’s look at the conflicts in how IR Magazine conducts its business.

On its web site, IR Magazine solicits corporations to pay to sponsor Roundtable events and Think Tank events as a marketing campaign. It then lists the many benefits, which include guaranteed coverage in the magazine: “Please note that all event marketing campaigns include coverage in IR Magazine, www.insideinvestorrelations.com, partnering publications, websites and social media,” explains the magazine.

On the topic of paying to sponsor a Roundtable, IR Magazine says: “This allows conference sponsors to position themselves as thought leaders in their area of expertise. It also provides a starting point for your discussions with your corporate audience during the conference’s extensive networking opportunities.” Is this a trade magazine or a public relations firm?

The Awards dinner also had corporate sponsors; firms like Bank of America/Merrill Lynch, Wells Fargo, Bloomberg, Nasdaq – all of which do business with JPMorgan.

These “synergies” of a trade magazine taking corporate funds to assist in a branding campaign had a familiar ring. Back on May 14, 2000, Salomon Smith Barney’s telecom analyst, Jack Grubman, who was supposed to be giving objective stock advice to investors while simultaneously sitting in at WorldCom board meetings and giving investment advice to its crooked executives, famously explained his nouveau model to BusinessWeek:

“What used to be a conflict is now a synergy…Someone like me who is banking-intensive would have been looked at disdainfully by the buy side 15 years ago. Now they know that I’m in the flow of what’s going on. That helps me help them think about the industry…Objective? The other word for it is uninformed.”

Two years later, on July 8, 2002, Grubman was being grilled by Bernie Sanders in a House Financial Services hearing on the collapse of WorldCom and its multi-billion dollar accounting fraud. That happened to be the exact date that Grubman’s employer, Sandy Weill, Chairman and CEO of Citigroup, parent of Salomon Smith Barney at the time – whose obscene compensation totaling $785 million over a five year period was made possible by all the telecom deals pumped by Grubman – was to be honored on the floor of the New York Stock Exchange as CEO of the Year. The award was given by another deeply conflicted magazine, “Chief Executive,” which said of Weill: “Few can match his keen eye for spotting synergistic deals….” This is how Bernie Sanders explained those synergies during the day’s WorldCom hearing – which was flashing on the TV screens around the floor of the New York Stock Exchange as Weill heavily perspired through his acceptance speech:

SANDERS. Mr. Grubman, you have indicated that you have had a close personal relationship with Mr. Ebbers. According to the Washington Post, you waited until June 24 to advise your clients to sell WorldCom stock, just 1 day before the company announced to the world that it improperly accounted for 3.8 billion in expenses over the last five quarters. The other telecom firms that you have recommended over the years, as I understand it, are such companies as Windstar Communications, XO Communications, Qwest Communications International and Global Crossing, and all of those companies are either in bankruptcy or now trade for pennies a share. My question for you, Mr. Grubman, did you have close personal relations with some of the management in those companies as well?

GRUBMAN. Okay. First of all, as I said, I had a good working relationship with Mr. Ebbers and with other management teams, some of the companies you mentioned.

SANDERS. Windstar.

GRUBMAN. Not really.

SANDERS. XO Communications?

GRUBMAN. To some degree. Qwest and in some cases Global Crossing.

SANDERS. And every one of those companies are now in bankruptcy or trading for pennies per share; is that correct?

GRUBMAN. Well, yes. But that’s not the cause and effect.

SANDERS. Well, what the cause and effect is, you were telling people to buy those stocks, and you had a personal relationship.

Less than one year after Sandy Weill walked off with his stomach-turning CEO award, the Securities and Exchange Commission had this to say about his relationship with Jack Grubman:

“In November 1999, Grubman upgraded AT&T from a Neutral (3) – his longtime rating on the stock – to a Buy (1). SSB and Grubman did not disclose in the report that Grubman had a conflict of interest relating to his evaluation of AT&T. Prior to the upgrade, Sanford I. Weill, the co-CEO and Chairman of Citigroup (and a member of the AT&T board of directors), had asked Grubman to take a ‘fresh look’ at AT&T, and Grubman had asked Weill for assistance in gaining admission for his children to the selective 92nd Street Y preschool in New York City at the same time Grubman was conducting his ‘fresh look’ at the company. Subsequently, Grubman stated privately that he had upgraded AT&T to help his children get into the 92nd Street Y preschool. After Grubman upgraded AT&T and his children were admitted to the preschool, Weill arranged a pledge of $1 million payable in equal amounts over five years from Citigroup to the 92nd Street Y.” (SEC complaint dated April 28, 2003.)

Then there was the “Commit a felony get an award” crafted by Salomon Smith Barney’s former go-to lawyer, Mark Belnick. That award wasn’t given by a magazine; it was honed out of the legal skills of Belnick himself.

Back in 2002, Mark Belnick, who had previously been a Wall Street rising star at corporate law firm Paul,Weiss, Rifkind, Wharton & Garrison, inexplicably decided to become General Counsel at fraud-infested Tyco International. Belnick inked a retention agreement for himself and brazenly filed it with the Securities and Exchange Commission. The agreement guaranteed  Belnick a payment of at least $10.6 million should he commit a felony and be fired before October 2003.

In a timely stroke of coincidence, Belnick was indeed charged with a few felonies like grand larceny and securities fraud by the Manhattan District Attorney’s office. Belnick was acquitted of those charges and the SEC let him off the hook for aiding and abetting federal violations of securities laws with a $100,000 penalty payment and a prohibition against serving as an officer or director of a public company for five years. Belnick agreed to the SEC settlement without admitting or denying the charges; he did not lose his law license and continued to practice law. While Belnick was drafting his “felony bonus” agreement with Tyco, he was also teaching a law course at Cornell on ethics.

The more things change on Wall Street, the more they stay the same — to the great detriment of our country.