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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
Vigilance Is Necessary In Dealing With Brokers
By: Chris O'Malley
Indianapolis News/Indianapolis Star. December 20, 2002
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EXCERPT: The 300 investors with a Prudential Securities broker in Marion, Ohio, watched their stocks rise like baking bread when the market was still sizzling in the late 1990s. The dough turned to bread -- as in cash -- in low-yielding money market accounts. The broker transferred their stocks to cash, figuring the market soon would crash. The trouble was, he was about a year early and clients didn't know about the switch. "One of their brokers committed a cardinal sin -- doing something in a client's account without their permission," said attorney Thomas A. Hargett of Maddox Hargett & Caruso. The Fishers law firm tried the case and, last October, the investors were awarded $11.6 million in compensatory damages for their estimated losses. The Ohio court also slapped Prudential with $250 million in punitive damages, in what is believed to be the largest jury verdict ever in a U.S. securities class-action suit. The case is a screamer for the need of vigilance when dealing with a stock broker. While it would be unfair and cynical to suggest that every broker is untrustworthy, there's a basic rule of the jungle in the broker-client relationship, said Daniel R. Solin, a trial attorney and author of "Does Your Broker Owe You Money?" "For the broker to truly look after your interests while at the same time earning the best living possible is like trying to ride a horse in both directions at the same time. More often than not, brokers ride in the direction of income for themselves and profits for their firms," he said.
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