Many investors have reason to support the Occupy Wall Street movement that objects to Wall Street greed. These investors have seen their hard-earned money dissipate in the hands of their “trusted financial professionals.”
In fact, Brett Arends of the Wall Street Journal believes that EVERBODY should be camped out protesting Wall Street (except Wall Street management). In his recent article, “Capitalists of the World Unite,” he point out that all sorts of investors have also been shafted by the Street.
Among those with an axe to grind, according to Arends, are:
Mutual fund investors ? Wall Street pocketed 40% of their returns as fees.
Anyone with a 401(k) or similar plan ? Fund choices are limited and relatively poor performers.
Hedge fund investors ? For all that risk and 22% fees they made 6% per year on average between 1980 and 2008.
Anyone following Wall Street advice ? The advice consisted of putting lipstick on a pig and calling it a “buy.”
Anyone investing in banks ? At Goldman Sachs, for example, employees received $80 billion while investors lost $25 billion over the last 5 years.
Unfortunately, the list doesn’t stop there. Additional victims of Wall Street’s include:
Lehman Brothers “100% Principal Protected” Notes investors ? These investors took the seller’s (UBS’s) word that the notes had “100% principal protection” but when Lehman went under, so did the notes.
Reverse convertible investors ? They probably don’t know who they are because the investments are called something else on account statements, but they include people who thought they were buying a safe note whose yield fluctuated with a linked stock, but it came with a hidden derivative that let the issuer slip them the depressed stock instead paying back principal at maturity.
Leveraged exchange traded fund investors ? A leveraged exchange traded fund that is supposed to return 200% of an index’s return can decline in value, even though the index rises. For instance, ProShares UltraShort S&P 500 (SDS), which makes a double bet against the S&P 500, reportedly lost 40% in 2010 as the S&P 500 gained 13%.
Non-Traded REIT investors ? Investors looking at their account statements saw them repeatedly valued at par despite the fact that the commercial real estate market had taken a nosedive.
All Americans – Taxpayers that had to fork over hundreds of billions of dollars to keep these banks afloat when their high-risk antics backfired.
The list goes on and on.
Investors undoubtedly have many reasons to protest Wall Street’s conduct. Wall Street has gone from being an honest, professional bastion of capitalism to resembling a cross of Barbary Coast financial pirates and casino operators.
Page Perry is an Atlanta-based law firm with over 150 years collective experience protecting investor rights and fighting Wall Street greed