Home -> Law Blog Directory -> Personal Injury Law Blogs -> New York City Personal Injury Lawyer

Personal Injury Law

: New York City Personal Injury Lawyer

Lehman and Washington Mutual: Investors fight back

By Vincent Imbesi

Financial Stocks: The New “Dot Coms”

In 2001 and 2002, many clients lost a lot of money because their advisors recommended speculative technology stocks, most of which never earned a profit. Six years later, investors again are suffering from investment losses, this time due to similarly speculative recommendations to purchase various financial stocks. To quote Yogi Berra, “It's deja vu all over again"

Lehman Brothers, Washington Mutual, AIG, Citigroup, Merrill Lynch, Bear Stearns, Fannie Mae and Freddie Mac are the new “dot coms” whose bubble has now burst.

What recourse does an investor have if a stockbroker or financial advisor recommended the purchase of any of the above-listed stocks? The answer, of course, depends upon the investment objectives of the investor at the time of the recommendation.

Over the past six months, most financial stocks have declined in value, due to their exposure to the subprime market. Take for example, Lehman Brothers, which has experienced massive losses over the past few months. Many stockbrokers recommended Lehman’s common stock, preferred stock, and bonds to their clients. Unless the clients were willing to speculate, and could afford to lose their entire investment, the recommendation was probably unsuitable.

With regard to recommending financial stocks, the stockbrokers negligence is clear: there was no reasonable basis for expecting that the financial services industry was finished with “writing-down” its subprime losses. As such, there was no reasonable basis for many investors to buy financial stocks during the past year.

Vincent Imbesi, the head securities attorney with the law firm of Napoli Bern Ripka, LLP, represents investors that lost money after their stockbrokers recommended the purchase a financial company’s stock, bonds, and preferred stocks. To contact Mr. Imbesi, please call 212-267-3700, or e-mail vimbesi@napolibern.com.

Originally posted at InjuryBoard by Vincent Imbesi

Full post as published by New York City Personal Injury Lawyer on October 01, 2008 (boomark / email).