Disgruntled investors are going after Wall Street once again, this time accusing one of investment bank Morgan-Stanley's high-tech mutual funds of making biased stock picks.
Recent lawsuits allege the Morgan Stanley Technology fund was influenced to buy and hold stocks of companies that delivered huge investment banking fees - or could potentially bring big business - to the investment bank.
According to the lawsuits, the Morgan Stanley fund followed the biased recommendations of the firm's analysts - decisions that have cost shareholders millions of dollars since the portfolio's October 2000 inception.
The fund lost 48 percent in 2001 and was down another 50 percent during the first nine months of 2002. While Morgan Stanley strongly denied the allegations, I fail to see how the management of the fund is somehow distinct from the other divisions of Morgan Stanley. Ultimately, they all work for the same boss.
The suits further claim that the tech fund failed to disclose that the firm had investment banking ties with a number of companies whose stocks were part of the portfolio. They also failed to reveal that those links could affect the fund's buy or sell calls.
Why bring all this up? For one thing, it is interesting to note that Morgan Stanley offered four of these types of funds in October 2000. Just around the time when we sold all of our positions (Oct. 13, 2000) and it became clear, at least to those of us who were tracking long-term trends, that a major trend change had taken place.
More recently in the news it's been Merrill Lynch who had a questionable deal involving transactions with failed energy trader Enron. Of course, the financial services industry regulates itself so well, that an $80 million payment to the SEC is sufficient to wrap up this case without admitting or denying wrongdoing.
What's the moral of this story? While it is impossible to predict these alleged conflict of interest schemes, it is definitely possible to follow a disciplined approach and be on the "right" side of the market so you can avoid jumping aboard a sinking ship.
About The Author
Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com
Trend following also called momentum trading is the simplest and... Read More
My paternal grandparents were born near Lake Como, Italy. My... Read More
How many of you out there think that the market... Read More
This column has previously discussed "picturing the future that we... Read More
"Risk comes from not knowing what you're doing!" Warren Buffett... Read More
So you have learned how to trade the markets by... Read More
In many respects, Singapore is the Switzerland of Asia.Begun in... Read More
There maybe several reasons why you to want to invest... Read More
Location ? Once the holy grail only for real estate... Read More
Investors are still too slowly realizing what the academics have... Read More
Stock market trading is a fascinating activity.There are so many... Read More
The American Jobs Creation Act of 2004 imposed strict new... Read More
When you invest, it simply means that you are putting... Read More
Discipline can be simply defined as your ability to follow... Read More
If you know next to nothing, how do you go... Read More
Let's face it, you're on a roll. After getting down... Read More
We have all heard that slogan that started back when... Read More
A barrel of oil bounced to over $60 Thu, which... Read More
To understand stock options, we need to look at Webster’s... Read More
If you're like many people, your retirement savings have not... Read More
More and more workers are leaving their jobs and taking... Read More
"The American Age of Inflation is finished." So says economist... Read More
Strong credit saves real estate investors money on mortgage finance... Read More
Arthur Levitt, during his tenure at the SEC, experienced many... Read More
In 1519, Hernando Cortes, beached on the shores of unexplored... Read More
The forex market is what is called an international exchange... Read More
For instance, if the market moves up in the first... Read More
There has been much talk lately about Coca-Cola and its... Read More
If you want to make the most of your personal... Read More
There maybe several reasons why you to want to invest... Read More
Disgruntled investors are going after Wall Street once again, this... Read More
Clean Up (includes the insides and the outside of a... Read More
Unfortunately, many investors who are seduced by the lure of... Read More
There are many steps in calculating the fair value of... Read More
When thinking about the investors business daily responsibilities in today’s... Read More
Leaders are stocks that breakout immediately when the market confirms... Read More
Over 80% of all individual investors lose money in any... Read More
Young readers know that March 4th is the birthday of... Read More
Before every protective put trade it is possible to calculate... Read More
In this "special report", I want to pose a few... Read More
If you've ever listened to Warren Buffett talk about investing,... Read More
Can you concisely summarize your investment philosophy in a few... Read More
The Light Crude Continuous Contract fell from $67.70 a barrel... Read More
Have you often wished you could have got in on... Read More
You don't HAVE to be trading.As a novice trader, you'll... Read More
"To drift is to be in hell, to be in... Read More
When raising capital for a business venture, warrants are a... Read More
There are many different ways to invest in world markets:... Read More
If you know next to nothing, how do you go... Read More
The perfect company - it's the holy grail of the... Read More
Investing Investing |
|