| Author | Message | ||
| Ernie (Ernie)
Member Username: Ernie Post Number: 734 Registered: 11-2001 |
That is why they are called "Brokers" and "Brokerages" cause they will make you go Broke. LOL. | ||
| arthur chambers (Art355)
Intermediate Member Username: Art355 Post Number: 1964 Registered: 6-2001 |
Taek: Would need to know the particulars. Was this a result of churning the account, so that fees were earned. Was it, sitting on the various investments while they went down? Mediation can be a great tool to resolve disputes. It is usually a first step in dispute resolution, however in this instance I would doubt that it will have much effect because generally there is some discovery to do, i.e., find out the facts, then attempt resolution afterwards. Because this involves securities, the matter will get resolved in arbitration, rather than a court room. If you need more info, give me a call. Art | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1300 Registered: 11-2002 |
Tim, I'm not saying private equity funds are having tough times. I'm saying that's it's tough to be a player in this market. I tried and it required waaaay too much time and effort and research and investing scruples I don't possess. I don't know the details of this guy's situation. I do know he got clobbered. Very unfortunate. I only have some insight to his bottom line...or balance, if you will. I don't know, the whole thing stinks if you ask me. He has good people on his side now looking into it. Your comments are spot on. Cheers | ||
| Tim Barnett (Tim_barnett)
Junior Member Username: Tim_barnett Post Number: 58 Registered: 4-2003 |
Wealth management fund from a big brokerage house? Losses in the order of -75%? "Account manager"? Sounds like the typical "buy & hold" (a.k.a. "wait & pray") approach. This philosophy has unfortunately afflicted large and small investors alike. Person A should take a look at all documents that were executed at the beginning of the account relationship. In particular, look to see how suitability questions were answered. Did Person A specify he/she wanted something �conservative�? If so, what�s the explanation for the massive losses? Furthermore, how were the funds of other clients with a similar profile managed? Did the brokerage house either advise these other clients to sell their securities or did it recommend entirely different investments in the first place? If so, this is a very serious problem since a firm should be consistent with its clients in a given portfolio style. By the way, it doesn�t matter that the account manager was terminated. This might help in fact � was he terminated because he failed to follow the firm�s guidelines and supervisory procedures? Brokerage firms have a duty to supervise the advice and activities of all its employees. Look at the disciplinary record of the brokerage house. Is there a pattern of similar complaints or failure to adequately supervise its employees? If there is no documentation of Person A�s suitability, then the brokerage house could be in violation of �know your customer� rules. Again, another basis for recourse. Kenny�s right that it�s incorrect to say that private equity funds have been having a tough time. In fact, private equity funds, or hedge funds, have historically done extremely well as a group in recent years so it seems unlikely that these losses were sustained with a diversified portfolio of hedge funds. On a risk adjusted, and even on an absolute return basis, they have dramatically outperformed the stock market and almost all other financial instruments for years. Hope this helps. | ||
| Dan (Bobafett)
Member Username: Bobafett Post Number: 793 Registered: 9-2002 |
I still think he's got an unfair advantage!  Remember what I keep telling you about RE! --Dan | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1287 Registered: 11-2002 |
Dan, You got a small glimpse of how he manages business and how he diversifies his holdings. There's no way that sucker's going to go through this type of stuff. Bastard's going to win. Cheers | ||
| Drstranglove (Drstranglove)
Member Username: Drstranglove Post Number: 595 Registered: 4-2003 |
No offence, but if he did not keep up at least monthly with a 9 figure transaction ($100,000,000) then he got what he deserved!!!!!!! Hell, I watch $10,000 deals rather closely. DrS | ||
| Dan (Bobafett)
Member Username: Bobafett Post Number: 791 Registered: 9-2002 |
Taek, Don't hold me to this, I can offer only from experience. My guess is mediation is going to be the first course of resolve, in hopes to avoid any legal filings, etc. If that doesn't work, then it most likely will escalate to either arbitration or even a suit, but I think the key distinction here is mediation is non-binding whereas arbitration can be (most likely). With reference to last place - I figured as much. It would've sucked if it were AS, but regardless it's not cool. I'll give you a call later tonight when I get back - actually going ot the gym (!!) --Dan PS: Are there established guidelines in the contract for dispute resolution? Clearly there's something, if mediatoin is the first action. What else does it say? | ||
| Kendall Kim (Kenny)
Junior Member Username: Kenny Post Number: 249 Registered: 9-2001 |
Taek- From the incomplete details I've read, it sounds to me he's been investing in private money management funds namely Hedge Funds... Hedge Funds are very loosely regulated, and they do not have to disclose their investments or trades to anyone.. Typically, they buy/sell in a respective niche they specialize in (usually short term), and raise money through word or mouth and reputation... They also tend to lock in investor's money for a set period of time based on their fundamentals.. To classify Private Equity as a whole as a tough market is inaccurate.. I'm sure there are a lot of Private Equity firms making bundles of money bottom fishing buying distressed companies pennies on the dollar.. It depends on what niche you are in... | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1280 Registered: 11-2002 |
What's the point of mediation if none of it is binding? Does it lead to binding agreements between parties? Is it a precursor to arbitration? John, My sentiments exactly. Kenny, I have no clue, although I know he was heavily invested in private equity, which is a TOUGH market. Dan, I think you'll get this. Let's just say that this guy is now firmly in last place after this little fiasco. Cheers | ||
| Phil Bryson (Phildo)
Junior Member Username: Phildo Post Number: 123 Registered: 8-2002 |
Taek-Ho, Sorry to hear about your experience. To answer one of the questions in this thread, the difference between mediation and arbitration: The decision of an arbitrator is final and binding on both of the parties; A mediator tries to resolve the conflict, but has no power to force a given solution on the arguing parties. | ||
| Dan (Bobafett)
Member Username: Bobafett Post Number: 790 Registered: 9-2002 |
I'm with Mike - my guess is it going to be like a non-binding arbitration. --Dan | ||
| Kendall Kim (Kenny)
Junior Member Username: Kenny Post Number: 248 Registered: 9-2001 |
Taek- was this a mutual fund trading on an exchange?? or was this a private hedge fund...?? If it's the latter, you're SOL.. But you can still try taking legal action to recover some of that money.. | ||
| John (Cohiba_man)
Junior Member Username: Cohiba_man Post Number: 168 Registered: 1-2003 |
The question is, what the HELL was your friend doing putting HUNDREDS OF MILLIONS OF DOLLARS in a fund and ignoring it until it was 75% gone!!??? | ||
| Mike B (Srt_mike)
Member Username: Srt_mike Post Number: 259 Registered: 12-2002 |
Breach of fiduciary duty and any number of other transgressions are often matters of opinion. That's why we have courts to decide these things. I doubt you could successfully sue because "they lost the money", but if you feel there was more to it, you have a justified lawsuit. If you can prove it, you could win. Anyways... I would think mediation is pretty much interchangeable with arbitration. I think the difference is an arbitrator's job is to act like a judge and make a (usually binding) decision on the outcome. A mediators job is to resolve the conflict, but I don't believe a mediator is obligated or even asked to come to some judgement or resolution. I believe a mediator is meant to facilitate the resolutio of the problem between the parties involved, whereas an arbitrator is meant to solve the problem on behalf of the parties. | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1278 Registered: 11-2002 |
Philip, During the bubble many people did things they were not supposed to. Many have sued brokerage houses and won because the way their money was handled was not acceptable. Anthony, Yep...Tough times, those. I lost my a$$ on a few of those high flyers, but I diversified my portfolio enough that I only took a mild asskicking. Cheers | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1277 Registered: 11-2002 |
I've heard of arbitration, but what the heck is mediation? Not my money by the way. Friend of a friend, blah blah blah. Cheers | ||
| Anthony Griffin (Redjeeper)
New member Username: Redjeeper Post Number: 28 Registered: 10-2002 |
Taek, I had the same problem with stock I owned in Worldcom. The only difference was that they were misstating earnings and cheating their investors. I lost aboout $4000 on that deal. I am not sure of the amount of recourse you would have on this. | ||
| Dan (Bobafett)
Member Username: Bobafett Post Number: 783 Registered: 9-2002 |
Arbitration proceeding? If that is the case, then I can put you in touch with my litigators (with reference to the conversation we had at dinner that night), just to talk at the very least. --Dan | ||
| philip (Fanatic1)
Member Username: Fanatic1 Post Number: 320 Registered: 2-2003 |
Sorry Taek........I certainly don't know much about the stock market but I know it's a gamble......I don't see how one can sue a broker for losing hte money......stocks go up, stocks go down....some win, some lose......that's about the extent of my understanding, but it's enough. | ||
| Jeffrey Wolfe (86mondial32)
Member Username: 86mondial32 Post Number: 254 Registered: 5-2003 |
Taek.. I can't say that I have much exposure to this matter... but I do have a few friends that suffered the same type of losses. They were told that their money would be handled as part of a fund and when the brokers lost most of it they then were told they should have kept track... Sick isn't it. | ||
| Taek-Ho Kwon (Stickanddice)
Intermediate Member Username: Stickanddice Post Number: 1275 Registered: 11-2002 |
OK, Person A loses his a$$ on the crumbling stock market when he thought he was putting money in a wealth management (read: conservative) fund from a big brokerage house. Couple of years later he finds out they've lost about 75% (!!) of his portfolio. Person A then calls the brokerage house who claim that he should have kept up with the account, and that the account manager has been terminated due to poor performance, and can't do anything about it. Person A is really ticked off and contacts some people in regards to this. Turns out there are many more like him and they have been filing suits against their brokerage houses. Suit goes to mediation, as per some fine print crap agreement Person A signed. Brokerage house supplied lawyer at time of agreement and trasfer of funds. 9 figure transaction. What is mediation in a situation like this? Anyone have similar experiences? Cheers |