Retirement Funds

GM, Ford, Chrysler Retirees: Beware of Financial Advisors After Your Severance!

Published on: April 1, 2009 | by Shepherd Smith Edwards & Kantas, LLP

About 7,500 General Motors workers recently agreed to a buyout of early retirement incentives and leave the company. Chrysler, Ford and many suppliers of the industry have also made offers to entice workers to take early retirement. This follows tens of thousands of other industry workers who have been bought-out of pension and other benefits in recent years.

Many who retire have little if any experience in investing and are soon beseiged by droves of salespersons hawking financial plans. In the past, strict laws and regulations were enforced regarding investors’ funds, especially retirement funds. However, as we have recently witnessed, securities regulators appear to be overwhelmed or incompetent.

For decades, Wall Street has blamed any abuse of investors on a few “rogue” brokers. Yet, many now believe that Wall Street is actually rotten to the core. In fact, the majority of financial advisors sincerely and diligently seek to serve their clients, although many of the investment products they are told to sell are inappropriate, riddled with costs or just plain fraudulent. Sadly, too many of the worst advisors attract unwary investors with false promises.

Victims of financial abuse are often unaware that they can seek recovery of undue investment losses according to the law. But investors must understand that the regulators “police” the securities industry and write tickets when they catch the bad guys. In order to recover, victims must hire an attorney to represent them in court or in securities arbitration.
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GM, Ford, Chrysler Retirees: Beware of Financial Advisors Seeking to Invest Your Severance!

Published on: March 27, 2009 | by Shepherd Smith Edwards & Kantas, LLP

About 7,500 General Motors workers have agreed to a buyout of early retirement incentives and leave, the company reported today. Chrysler has also agreed to extend its offers bo buy-out workers beyond tomorrow. This follows tens of thousands of other autoworkers workers who were in recent years persuaded to retire and retire early and receive large sums of money.

Unfortunately, many retiring persons have little if any experience in investing. Enter droves of salespersons hawking financial plans. In the past, strict laws and regulations were enforced regarding investors’ funds, especially retirement funds. As we have recently witnessed, securities regulators are apparently overwhelmed or incompetent. This has resulted in tragic results recently as retirees have not only lost their careers but also their only safety net.

For decades, Wall Street has blamed abuse of investors on a few “rogue” brokers. Now many believe it is Wall Street itself that is rotten to the core. In fact, the majority of financial advisors sincerely and diligently seek to serve their clients. Yet, many products they are told to sell are inappropriate, riddled with costs or just plain fraudulent. As well, too many of the worst of advisors attract unwary investors with false promises.

Victims of financial abuse are also often unaware they can recover undue investment losses according to the law. They must understand, however, that regulators “police” the industry, and write tickets when they catch the bad guys. In order to recover, victims almost always have to hire an attorney to represent them in court or securities arbitration.

Our law firm has represented thousands of investors, most who lost retirement funds, and many who are former autoworkers. If you or someone you know has lost retirement funds you feel were invested improperly, contact us today for a free consultation.
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U.S. Supreme Court Decides That 401(k) Retirement Participants Can Sue for Losses Under ERISA

Published on: February 20, 2008 | by Shepherd Smith Edwards & Kantas, LLP

WASHINGTON – The Supreme Court ruled unanimously today that individual participants in 401(k) retirement plans can sue to recover their loses under the federal pension protection law.

Over 50 million workers in the U.S. have a total of $2.7 trillion invested into 401(k) retirement plans which are governed by the Employee Retirement Income Security Act (ERISA). Yet, as has recently been the unfortunate fate in court of other investors, judges have ruled against 401(k) participants who seek to recover under the very pension law written to protect them.

James LaRue of Southlake, Texas, filed such a claim stating that the value of his 401(k) plan fell $150,000 when the plan’s administrators failed to follow his instructions to switch to safer investments. Yet, attorneys for the plan administrator claimed the law only allows recovery of losses to the “plan,” not losses of an individual participant in the plan.

Class Action filed against Morgan Stanley on Behalf of Former Eastman Kodak Employees

Published on: January 17, 2008 | by Shepherd Smith Edwards & Kantas, LLP

Lawyers have filed a class action suit against Morgan Stanley for a group of former Eastman Kodak employees they say were persuaded to retire early and invest their retirement assets through Morgan Stanley.

According to the Dow Jones News Wire, the class action is seeking nearly a half billion dollars in damages from Morgan Stanley because its brokers advised the Kodak employees retire early with promises of financial security that never materialized. One of the attorneys estimates 1,000 investors or more are involved. If so, the claim seeks approximately $500,000 per former Kodak retiree.

Firms which report the results of class action cases estimate that recovery in securities class action cases is LESS THAN THREE PERCENT of the actual losses to investors! If one were to assume that 1,000 Kodak retirees lost, on average, $500,000, each may receive LESS THAN $15,000 according to this average.

$600 Million Set Aside by State Street May Be Tip of Mortgage Litigation Iceburg

Published on: January 8, 2008 | by Shepherd Smith Edwards & Kantas, LLP

State Street Corp. announced it established a pre-tax reserve of $618 million billion “to address legal exposure and other costs associated with the under-performance of fixed-income strategies managed by the company’s investment management arm,” blaming exposure to subprime mortgages. The company referenced “customer concerns as to whether the execution of the strategies was consistent with the customers’ investment intent” without identifying any specific litigation.

However, the New York Times published an article stating that State Street created the reserve “after five clients sued it, claiming they had lost tens of millions of dollars in State Street funds they were told would be invested in risk-free debt like Treasuries.” The article added that State Street’s reserve “highlight the legal challenges that lie ahead for financial firms.”

The first of the five lawsuits referenced by the Times article was filed October 1, 2007, by Prudential Retirement Insurance and Annuity Co. The action “seeks, among other relief, restitution of certain losses attributable to certain investment funds” sold by State Street’s investment management arm, and alleges State Street “failed to exercise prudent investment management,” in violation of the Employee Retirement Income Security Act of 1974 (ERISA).

Supreme Court to Rule on Whether Employee Can Sue for 401K Losses

Published on: November 30, 2007 | by Shepherd Smith Edwards & Kantas, LLP

The US Supreme Court is considering a case that could allow employees to file lawsuits involving the mishandling of their retirement funds. The issue involves the limits placed on lawsuits under the Employee Retirement Income Security Act (ERISA), which regulates private sector retirement plans and protects pension fund money from misappropriation.

James LaRue, a former employee at DeWolff Boberb & Associates, a management consulting company in Dallas, Texas, says that he lost $150,000 because the company did not follow his instructions on how he wanted them to invest his retirement funds.

LaRue claims that he asked DeWolff Boberb & Associates to change the way his money was allocated in mutual funds available through his 401 (k) plan. They did not make the changes he requested.